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What's the Most readily useful Stock to Spend In?

If you're similar to stock market investors you have struggled with finding the most effective stocks to invest in.

There are many approaches to find a very good stocks to invest in. But first you need to decide what method works best for you.

Basically you can find two main kinds of stock market investing

1. Buying growth stocks

2. Buying value stocks

Growth stocks are companies which are growing fast in earnings. There are a large amount of high tech and medical growth stocks.

Value stocks are stocks which are undervalued because they trade at a cheap compared to the company's fundamentals (i.e. earnings, dividends, sales etc...)

Growth stocks generally will fatten your banking account faster but there is more risk whereas value stocks will generally grow at a slower more sustainable pace but probably won't offer you ulcers.

Here's what some investors look for in a growth stock (based on my understanding of the National Association of Investors Corporation (NAIC) criteria):

1. Strong Earnings Growth - either quarter to quarter or year over year

2. Strong Forward Earnings Growth - analysts estimate what earnings is likely to be for the following quarter or year, if they estimate growth that's a plus.

3. Profit margins - you'd prefer the company to be making a considerable amount of profit to sustain further growth

4. Return On Equity (ROE) - look for growth in ROE or a well balanced ROE

5. Doubling in 5 years or less - you'd like the stock to double in 5 years - look at what the analysts estimate for price potential.

Also here's what some value investors look for:

1. Shares price below intrinsic value

2. Low Price to Earnings (P/E) ratios

3. Price to Earnings Growth (PEG) ratio below 1 is good

4. Stock price is significantly less than tangible book value

5. A debt to equity ratio below 1

6. The company's assets should be much more than the company's liabilities by at least one factor of 2

7. Dividend Yield within 1/3 of the total amount of the AAA bond yield

8. Earnings growth of at least 7% annually for days gone by 10 years

There are a number of alternative methods to find a very good stock to buy but this should give you a starting point.