How to Pick a Stock

My First Stock

So you’ve been saving money and reading about the Stock Market. Finally the market drops by 30% and you see your opportunity to jump in!

And now what? How to pick a Stock?

In this post I’ll show you the first stock that I ever bought and which I still hold (highest portfolio position) and guide you through my rules when picking a stock.

Choosing a Stock to invest in

Another hard decision right? With thousands of Stocks to choose from, the question comes again.. how to pick a stock??

My Nr.1 Rule: To invest in a Stock. I either:

– Love it

– Use it

– Truly believe in it

What to look into:

1. Earnings growth
   Look into the earnings report. A general increase is a good indication that the company is on the right track.
   
   
   
2. P/E Ratio
   To find the P/E ratio, divide the current share price by its earnings per share. The higher the P/E ratio, the more likely it is that there will be a significant growth in the future.
   
   
   
3. Competition
   Who are the companies biggest rivals? Is it well placed against them? What allows it to stand out?
   By studying the market you’ll see if the company stands out in its Industry.
   
   
   
4. Debt
   Debt can be a good thing! No need to run away just because you hear ‘debt’. In fact, (almost) all companies carry debt. The thing you need to watch out for is companies with high debt levels relative to their equity.
   
   
   
5. Dividends
   Normally, a company that pays dividends has a degree of stability. Look for companies that pay and regularly increase dividends over time. Dividend Aristocrats are for exemple companies that have paid and increased their dividend every year for atleast 25 years. Some of my favourite companies are Dividend Aristocrats. You can find them here.
   
   

Do your homework

Before making a decision. After you choose the right match for you, buy it! It should be a stock that lets you sleep at night, because no matter if the share value falls 5%, you know what and why you invested in.
When hit with recessions or declines, you must stay the course. Economies are cyclinal and the markets have shown that they will recover.

The first Stock I ever bought was AT&T (T). They matched everything I was looking for.
I believe and see a huge market for 5G. In my opinion, they got an edge over their competition. An awesome Dividend Yield.
It’s a company that I’m really happy to have invested in and I’m always looking into increasing my position.

Some of my favourite Dividend Stocks

• https://www.andrespassivejourney.com/top-5-dividendstocks/

My Portfolio

• https://www.andrespassivejourney.com/category/my-portfolio/

My Watchlist (APRIL 2020)

• https://www.andrespassivejourney.com/feed-2/

Happy Investing! 🙂