stocks you should avoid

Stocks You Should Avoid

Investing in a stock is synonymous to investing in a company, therefore you’ll need to understand what is going on with the company before you start investing.

Below are some of the kinds of company’s stock to avoid:

• Hype stocks that do not stand the basic financial fundamentals

• No revenue growth within the past 5 – 10 years

• No profit growth within the past 5 – 10 years

• Not enough cash flow left to invest in Research & Development, pay out dividends, pay outstanding debt

• New stocks with not enough financials to analyze

• Overpriced companies with no value

• Sells at a price significantly higher than its fundamental earnings and revenue outlook

• The fundamental principle of investing is to buy low and sell high or capitalize on the stock price increase

• Newly released IPO - Initial Public Offering stocks

• Risk of overpaying for the stock as owners are attempting to raise capital at a premium price

• Best to wait when the price of the stock stabilizes or even drops once the buzz dies down

The best stock investments to look into when investing in the stock market is to buy shares of great businesses at reasonable prices and hold on to the shares for as long as the businesses remain great.