Scan thousands of stocks looking for screaming bargains:
There are always companies , which ae not the leaders today but have the potential to be in the futurre. So scan the possible number of stocks and found out about some screaming bargains., which are available cheaply.
Calculate how management is using the money they have :
Home buyers understand about equity, it is the value of the home less the amount owed to the bank. The same is true of the business. Its equity is the total assets minus all the liabilities. You can think of this as the money locked up in the business. It is the measure of how much money management has to run the businesss. Another measure of the money available to management is the capital of the business. This is the equity plus the long term debt of the company. Clearly the successs of any business id going to depend on how well management uses its equity and its capital. This is commonly measured by two ratios called return on equity and return on capital. Simply these are called the earning of company divided by equity and capital. There abbreviation are RCE and ROC.
Many company consistently loose money year after year. So they do not even have an RCE and ROC Others have very low value for these ratios. If the management is making a few percentage on the money it has , then over time this is all u can except to make over years. If u want a healthy returns any shares that you purchase , at the very least you need to select company with manage ment that is making a health returns on money that they have.
Stay away from "glitter" stocks .