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Here are a few must-read tips to buy the best stocks

Are you an investor with a keen interest in the US stock market? Have you been contemplating which will be the best stocks that you could buy in 2017 but not been able to make up your mind? With umpteen numbers and types of changes happening in the market, especially on the financial side, the market seems to be quite volatile. Stock purchasing is something that should be done with great attention, and although it may be tempting to purchase the most popular stocks, you need to be alert as these stocks are normally overpriced due to popularity.

Here you will find some of the most popular stocks to buy for 2017. Most large blue-chip stocks and companies are some of the most popular options in the market, but you will realize that there are umpteen other companies that have good potential and an excellent future in terms of their stock values. For making the right decisions, given below are some guidelines that will surely help you to figure out the best stocks to buy for 2017.

  • Invest only in the best breed companies: This is one rule that you need to always keep in mind while buying stocks. So, either go in for companies that have long been established or appears to be emerging with of a lot of strength. Never go in for the small fish that has every chance of dropping on you like a pile of bricks if and when the market takes a turn. Buy something that you will have no qualms holding together even if the market remains shut for a decade: the golden rule is to invest your hard-earned money only in stable companies that have competitive benefits of a durable nature.
  • Check out the debt-equity ratio: This is the ratio that tells you the proportion of a shareholder’s equity and the debt utilized to fund the assets of a company. So one needs to ensure that you purchase stocks of a company whose debt-to-equity ratio is comparatively lower as this hikes up the opportunity of making profits. Ideally, companies that have a debt-to-equity ratio lower than two would be safe to purchase.
  • Diversify your stocks: It is always better to diversify your purchase and invest in around ten companies across various sectors as the chances of incurring huge losses is instantly lowered. So even if a couple of stocks you have purchased is facing a bad phase, you can rest assured that the other eight will hold you in good stead.
  • Checking out ROE/ROCE ratios: You need to take out time to check thoroughly whether the proposed company has been doing well. This can be done easily by scrutinizing the company’s “return on capital employed “or ROCE and the equity returns known as ROE. If the ratios are on a scale of more than eighteen percentage, the company has excellent business and is guaranteed to reap rich returns in the long term. This points out the wonderful growth of the company and a promising future as far as investing in their stocks are concerned.
  • Opt for sectoral leaders: It is wiser to opt for leaders in the sector rather than going in for a company that is “a sectoral laggard” with the optimism that it will bloom and will reach great heights. Remember the fact that no price is considered too very high and if you want the best, you need to pay reasonably well.
  • Go for consumer-facing businesses: Opting for a “B to C” business is always advised since such firms require minor capital for working and have a huge potential for sustainability as well as incremental growth. These kinds of businesses have the power to bargain and can also raise the price against the chances of high inflation.
  • Never let emotions overtake you: Emotions especially greed can wreak havoc and lead to bad decisions if you are not careful in the stock market. It becomes difficult to resist the chance of making a huge profit in a short time span, and huge sums of expected profit can cloud your judgment. So, beware of committing blunders without studying the stock market thoroughly and regretting your decision later.
  • Take the time to implement the basics of investing: Just having excellent knowledge alone will not suffice to make profits in this market. You need to ensure that the basics or fundamentals of investing are implemented to perfection when you make your list of stocks to buy for 2017. This is guaranteed to ensure that you do not incur unbearable losses in the stock market.
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