How do I know what stocks are good to invest in?

: What stocks are good to invest in at the moment?
Im currently doing a stock market project in class, i need some ideas & pointers in what stocks would be good to invest in. Thank You !

Answers and Views:

Answer by DeAnne
NONE. The stock market is like a casino. It’s basically gambling. Every time I
bought shares and thought they’d rise, they didn’t. Not even G.E.

Buy property or gold instead.

Answer by Myles
Extensive, detailed analysis of a company’s business, management, and its financial statements are the only way to know for sure whether a stock is a good one or not. These factors are called “fundamentals.” Finding good fundamentals is just one part of the puzzle though – the other component is price. The stock of a good company can be expensive, so it wouldn’t make sense to buy. Your goal is to find good companies with stocks that are relatively cheap – it will gain value when the market comes to the same conclusion you reached. You can tell how expensive a stock is by looking at its “P/E Ratio.” Higher P/E generally means the stock is expensive, while lower P/E means its cheap. Don’t look at price though! That tells you next to nothing because companies have different numbers of shares on the market.

Some companies that I personally invest in include Apache (APA – an oil company) and Encana (ECA – natural gas company). If you’re looking for something more well known, look at Apple (AAPL) or Ford (F).

Answer by John W
There’s two aspects to selecting a good investment, first it needs to be a solid business in no danger of going under, second you want it at a good price, preferably below it’s value. Unfortunately the two objectives are not always consistent with each other, if a company is distressed and hence selling below it’s value, there is usually a reason for that. But you should at least be able to select a company with a good business model, with a solid brand and with defenses against competition and you should be able to assess the problems they are facing and decide if they have the means to address those problems.

There are many ways to identify a company in distress.

News headlines are one such as Martha Stewart’s prison sentence clobbered Tyco stock.

Value Line publishes a list of companies whose value have decreased the most in the past 13 weeks.

There’s a publication called Portfolio Reports ( www.portfolioreports.com ) that publishes the 10 stocks most recently purchased by fund managers.

To avoid subscribing to Portfolio Reports, the information is on public filings ( SEC Form 13-F ) which you can get from the Edgar system ( ). Nasdaq has the information in condensed form.

The Value investors Club is a useful resource and Joel Greenblatt has a website www.magicformulainvesting.com which has a free screen using his methods to find undervalued stock.

Remember, there is a reason for stocks to be undervalued, you have to decide if the business is solid enough for you to invest in.