QUESTIONS TO ADDRESS
BEFORE INVESTING IN A COMPANY
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Before investing your hard-earned money, it's important to evaluate a company carefully. Here are key questions to help you make an informed decision.
What products or services does it offer? Who are its customers?
Does the company have a strong brand or competitive advantage?
2 INDUSTRY OUTLOOK
Is the industry growing or declining?
What are the future prospects of this industry?
Are there any major risks or regulatory challenges? How does the company compare to its competitors?
3 FINANCIAL HEALTH
Is the company profitable?
Has its profit grown consistently over the years? What is the company's revenue trend? Does it have low debt?
Are its return ratios (ROE, ROCE) good?
Is the management honest and trustworthy? Do they have a good track record? Do they communicate clearly with investors? Is the management vision aligned with shareholders' interest?
Is the stock price reasonable compared to its earnings? What is the PE ratio compared to industry average? Is the company overvalued or undervalued?
6 RISKS & OTHER FACTORS
What are the key risks to the business?
Is the company dependent on a few customers or suppliers? Does it pay regular dividends?
Will your investment goal and time horizon suit this stock?
CONCLUSION: Invest in a business, not just a stock.
A good company with strong fundamentals and honest management is more likely to create wealth over the long term.
Look for a business that is Easy to understand Solves a real problem
Look for an industry that is Growing or has long-term potential Less affected by government interference
Look for a company with Consistent profit and sales growth Strong balance sheet Efficient management of money
Look for management that is Experienced and capable Transparent and ethical Focused on long-term growth
Look for a stock that is ✓ Fairly valued