First stock to buy for beginners
If you are just starting out investing or planning to invest. Here is a process that I use to choose stocks.
- Baby food
- Maggi
- Bottled premium water
- Coffee
- Chocolate
Among these my favored products are manufactured by a single company, NESTLE INDIA.
Lets take a look at this shares price: Click here
How has the share been doing recently?
Seems to go up almost every year.
The conventional advice:
Buy Low, Sell High
I am going against this:
Buy High, Sell Higher
Going against conventional advice
Figuring out whether a share is at a low price or high is a science and an art which very few people have the time or inclination to master. I would rather buy and hold something which is going up.
Let us say we identify a stock which is at 80 per share. All the ratios that people seem to be talking PE, PEG etc are all very low as compared to industry average.
The company seems to be at a good buy at the current price!
Unless you dig deep into the company it looks very attractive. I have some resources at my disposal, I don’t think I can figure out why a particular company which seems to be priced at a very low price by the market is priced low.
Is there a management issue which I can’t see. Did one of the products fail some standards. Are they facing a crisis which is not publicly known or hidden in the public data which only an expert would be able to figure out? That is why I don’t touch shares/stocks/companies which are trading at a low valuation. Not as my first purchase, for sure.
Don’t worry these companies will be looked into once we make some PROFITS.
BONUS CONTENT: If a share does not have an option chain. Don’t buy it. How to check if the share has an option chain. Why? I will post it up soon.