You stay put. We collect data from various sources and analyse for you to bring daily stock picks for you. Some of the stocks are momentum stocks or hot stocks which are talk of wall street. Value stocks are stocks to buy now for later.
Every company’s goal is to turn cash over quickly and the entire cash conversion cycle is a measure of management effectiveness.
The cash conversion number is a relative number. You can’t look at a single cash conversion number and determine whether it’s good or not. You need a frame of reference.
And that reference is it’s historical averages as well as the industry competitor cash conversion numbers.
E.g. compare Costco, Target, Wal-Mart and you can get some deep insight into how each business is run simply by comparing.
Look for trends where the cash conversion number is decreasing. Be cautious with big increases as it indicates possible cash shortage and inventory issues.
The lower the better, and a great way to compare competitors. The most common measure of a stock is the price/earnings, or P/E ratio, which takes the share price and divides it by a company’s annual net income. Generally, stocks with P/Es higher than the broader market P/E are considered expensive, while lower-P/E stocks are considered not so expensive.
The business can pay you for your ownership stake in several ways. It can give you a portion of the profits, which for shareholders comes in the form of a periodic dividend. It can continue to expand the business, reinvesting money earned to increase profitability and raise the overall value of the business. In such cases, a more valuable business makes each piece, or share, of the business more valuable. In such a scenario, the more valuable share merits a higher price, giving the share’s owner capital appreciation, also known as a rising stock price.
Not every company pays a dividend. In fact, many fast-growing companies prefer to reinvest their cash rather than pay a dividend. Large, steadier companies are more likely to pay a dividend than are their smaller, more volatile counterparts.
The most common measure for stocks is the price to earnings ratio, known as the P/E. This measure, available in stock tables, takes the share price and divides it by a company’s annual net income. So a stock trading for $20 and boasting annual net income of $2 a share would have a price/earnings ratio, or P/E, of 10. Market experts disagree about what constitutes a cheap or expensive stock. Historically, stocks have averaged a P/E in the mid teens, though in recent years, the market P/E has been higher, often nearer to 20. As a general rule of thumb, stocks with P/Es higher than the broader market P/E are considered expensive, while stocks with a below-market P/E are considered cheaper. But P/Es aren’t a perfect measure. A company that is small and growing fast may have a very high P/E, because it may earns little but has a high stock price. If the company can maintain a strong growth rate and rapidly increase its earnings, a stock that looks expensive on a P/E basis can quickly seem like a bargain. Conversely, a company may have a low P/E because its stock has been slammed in anticipation of poor future earnings. Thus, what looks like a “cheap” stock may be cheap because most people have decided that it’s a bad investment. Such a temptingly low P/E related to a bad company is called a “value trap.
HOW TO PICK STOCKS
It’s not as complicated as it may seem. We bring free daily stock picks for you. This include value stocks also. You only need to know a few terms in order to get a basic understanding of any stock. Here are three you should know:
The price-to-earnings ratio (P/E ratio) is the best indicator of how expensive a stock is. The actual price of a share, on the other hand, is relatively meaningless. The P/E is simply the price per share divided by earnings per share. It shows much investors are paying for a dollar of profits. Historically, the average P/E ratio is 15.7. Today, the S&P 500 P/E is 26.25. P/E ratios can range from none for companies without profits, to the triple digits for companies with slim profits and high prices, and single digits for companies in decline.
Revenue is simply the total sales of a company in a given period. Wall Street demands that essentially every stock show revenue growth, or at least have a plan to do so in the near future. While profits are more important to investors, profit growth can be more volatile and is often influenced by one-time events, making them more difficult to parse on a quarterly basis. Profit growth can also come from cost-cutting, which is not always in the best interest of the company’s long-term growth. Revenue growth, on the other hand, is more straightforward and consistent, and generally gives a clearer reading of a company’s growth prospects.
On financial news sites like Yahoo! Finance, annual dividend payouts are listed alongside percentages called dividend yields. The yield is the annual dividend payout divided by the stock price. It’s the percentage of the stock’s value that investors get paid back to them each year. The S&P 500’s average dividend yield is 1.9%, while the best dividend-paying stocks pay 4% yields or higher. Note that most stocks pay out dividends on a quarterly basis, and many stocks don’t pay dividends at all.
Beginning investors will be best off picking a stock in a sector they are familiar with. Love going to theme parks? Think about putting some coin into Disney. Have a medical background? Check out healthcare stocks. There are thousands of publicly traded stocks in the U.S. Narrowing them down based on your own interests or experience can make a complicated process much easier.
Familiarity alone isn’t enough of a reason to buy a stock, but it can give you an edge over the pros, and it will make it easier, even enjoyable, to follow the stock. You need to understand the underlying business, after all, in order to make smart investments.
It’s no surprise, for instance, that millennialms recently flocked to Snap Inc (NYSE:SNAP) shares after its IPO, as young people are by far the biggest users of Snapchat and therefore have the best understanding of the product.
All Rights are Reserved.