Right Time to Invest In Stock Market

Share market is always viewed and studied as one of the interesting investment opportunities. Share market, while describing in a nutshell is a public market where the shares and derivatives of different companies are traded upon an agreed price. Derivatives are the financial instruments, the value of which depends upon the other underlying variables. Those who are trading in the share market buy the shares or derivatives of different companies and sell them later at the time of requirement of money or when they feel as the right time to sell the shares.

The difference between the selling price and the buying cost determines the profit or loss. The agreed price upon which they buy and sell the securities is the most important factor in the share market trading which depends upon various other factors like the worldwide share market trend, sensex, the performance of the company, the performance of the competitors, economic atmosphere of the country, etc.

There is no such time as the best time for investing in the stock market, there are only best stocks in the stock market investment. And do not wonder which is the best stock for investment, there is no strict definition for best stock also. The companies with high growth potential and whose current prices are not very high are called undervalued stocks. Those are the stocks which we presume to be the best stocks which will give us huge profits or capital appreciation.

If we purchase those stocks at the current prices which are comparatively low and when we sell it in the future the prices must have gone up with its growth potential and when we realise the sale proceeds in cash it will be much more than what we invested and will give a huge or considerable profit. That kind of stocks are what we call best stocks. Or even if we are holding those shares it will reap you benefits in the form of dividends and capital appreciation. Capital appreciation is nothing, but the increase or appreciation in the value.

Selecting the best stock for investment is not a simple procedure. We will have to study and analyse a few facts before we invest in some stocks. It is too vast a subject to give a clear cut idea, the analysis of the following criteria will help you in selecting the best available stocks.

• Earnings Per Share(EPS) and PE Ratio
• Book Value Per Share
• Debt Equity Ratio (Divide Total Debt by Total Equity)
• Current Ratio (Divide Current Assets by Current Liabilities)
• Profit Margin (Divide the Net Profit with Revenue)
• Return on Capital Employed and Return on Equity
• Dividend History
• Profit Growth
• Cash Flow Details
• Business Segment and Growth Potential
• Size of the Company
• Competitive Advantage In the Market
• Brand Value and Product Differentiation
• Goodwill
• Market Scenario
• Economic Strategy of the Company
• Economic Atmosphere of the Place of Main Operation of the Company
• Political Influential Factors of the Country

These are the criteria that help you in selecting the best available stock.  However, it does not mean that the all of these criteria must be favorable for a stock for being eligible.  You can leave out some criteria or give more weight age to the other favorable criteria over the adverse ones, depending upon the time period you are planning to held the shares or how much risk you are ready to undertake.