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Thursday, 10 November 2011

Analysis of a stock

Before Investing , you need to know the different types of stocks and have to analyze the stocks.

What are different types of stocks in Stock market?

1.Common stocks:  These stocks are stocks that offer you a bit of ownership of a company. Entitles you to some dividends and allows you one vote for each share you own in electing directors or making key business decisions. These stocks are different from debentures or bonds. which are money given to a company as a loan in return for the promise of specific interest.
2. Preferred stocks: These stocks offers you preferential treatment when it comes to paying of dividends.If you have preferred cumulative stock, your position is secure.Those holding preferred types of stocks usually have no voting ability.
3. Growth stocks: The stocks which increase their sales and earnings from one year to the next year by at least 15% will come under growth stocks. The company with growth stocks is generally a stable company.
4.Value stocks:The stocks that were beaten down due to temporary problems will come under value stocks.Investors believe that the stock market overreacts to news about a company.
5.Dividend Stocks: The stocks which gives dividends based on the number of shares owned and typically on a quarterly basis and financially solid will come under dividend stocks.
6. Seasonal Stocks:Stocks which grows according to the seasons are seasonal stocks.
7.Blue chip stocks: Companies who are considered leaders in their industries and show promises of long term success. They have good reputation for dividend payout and have recognizable brand.
8. Technology stocks: Technology stocks are stocks bought from companies that are involved in higher technology sector.
9. Speculative Stocks: These stocks are riskier stocks and often offer a greater chance for higher profit but also pose a greater risk. These stocks are generally good only for very confident investors.
10.Low-risk,Medium-risk and High-risk stocks: Stocks from banks and utilities fall into the Low-risk stocks. Those stocks which have good history of dividend payout considered medium-risk. Penny and Speculative stocks fall into the High-risk stocks.

How to analyze the stocks?

There are many techniques to analyze the stocks.
1.Fundamental Analysis:It looks at the details of a specific company like 
  • Who are the directors
  • How the company operates in the market
  • What are the chairmen statements
  • History of the company
  • Current status in the market
Reviewing its income and Balance sheet
2. Technical Analysis: It is looking the company's stock value only over a period of time on a chart. By comparing the stock price against its moving average and other calculated chart lines. A company's financial statements are less important in this type of analysis.
3. Index method: In this type of analysis, investors value their portfolio by trying to create diverse investment strategies.The investment portfolio is weighted by market capitalization.
4.Analyzing using Inside information: Some investors try to analyze the stock market by using information gained from insider sources in a company. This is illegal in most places.
5. Comparative Analysis of stocks : In this method of analysis investors compare different stocks, trying to figure out which stocks are yielding  more profit and which stocks are most likely to offer profit in the future. This type of analysis make it easier when deciding which stocks to buy and which to sell.
6. Earnings revisions of stocks and the services of an analyst: In this method of analysis investors look at analysts projections and earnings expectations.
7.Stock analysis software: Investors use software to evaluate investments regularly and make them alert.
8. Online stock analysis:  Investors also use online stock analysis to evaluate and make them alert


వెంకట్. బి said...

Anila , Fantastic my dear friend. Keep it up. I have to go through all your postings once again. Very very beautiful info you are giving. I would like to say thank you also

Raj said...

Wow.. that was a brilliant, insightful and exhaustive analysis of stocks. Brought back my MBA memories. Very well written. :)

worldknowledge said...

Thank you very much

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