Tips To Find Top Hot Stocks to Buy and Best Sectors To Invest for Equity Portfolio?

Tips To Find Top Hot Stocks to Buy and Best Sectors To Invest for Equity Portfolio

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How difficult it is to find top few best sectors or hot stocks to buy and Invest from the Indian Stock Market? We search the world upside down Googling visiting different stock market websites to find out hot stocks tips to buy or sell? But how many of you care for the reasons before buying or selling a stock?

You dont have to be a genius, a fundamental or technical stock analyst expert adviser or a Rocket Scientist to find good stocks or sectors to buy.

I am not going to talk about EPS, PE, Top Line, bottom line, fundamental valuations cheap or expensive. Because just looking at few basic simple business fundamentals will help you reach a conclusion whether one needs to buy a stock or sell, rather than calculating price earning multiples which wont be any of your use anyway. As you read on, we will discuss those few basic business fundamental requirements.

Buy Business, Not Stocks

One should learn that it's not about buying stock/share of a company; it's about owning the business and becoming a partner in it. You make yourself a part of that company, that business and grow from it eventually as the years passes by. Investing into great business makes your chances higher to create massive wealth which can only be reached after years of planning, practiced discipline and commitments.

Example Of Investing In Great Business

One who started investing/SIP for just Rs 1000 a month in Infosys since year 1990. Total investment till 2010 is around 2.45 lacs in 19 years and the portfolio valuation including bonus etc is a whopping 1 Crore plus excluding all those chunks of dividends cherished for all the years.

Good Corporate Governance and Proven Management

This is one of the most important factors to be looked out while making a Investing bet on a particular stock of a company. What investors hates worldwide is a management who are out there to loot poor innocent shareholders.

After different financial and corporate scams, every investor should ask themselves this question before investing - Can I trust the management of the company I am becoming a partner with?

Companies with good corporate governance often tends to get premium pricing/valuation, as Investors are ready to pay a premium price for the superior quality of management they get. For example, just look at Titan Industries. Companies with high promoters holding also indicates the confidence of the management about there business and future prospects, but this is certainly not a guarantee of a performance.

Is The Companies Business Model A Proven And Sustainable One?

It is said by business analyst and experts that Indian Companies have a better and sustainable business model than compared to its global peers. You can understand why Indian Economy and Indian Stock Market attracts so much of foreign money?

Always look to buy stocks of a company after you understand basic things about its business model, like what and how it does its business? Once you understand what business it does and follows, ask yourself - Will the business grow more in the next 3-5 years? If so, Why?

Sectors - stocks related to the growing Indian Economy GDP will do even better as they will be fundamentally backed by a Nations Economy which is growing 8.5% Year on Year and is expected to grow further in the years to come beating China as far as growth is concerned. Avoid buying or Investing in a stock which business you dont understand or have a doubt that it can grow.

Prefer Low Debt and Low Leveraged Companies

Another thing stock market hates is too much of debt or high leveraging. If you noticed, during 2009-2010 bull market rallies, companies and sectors with high debt or leverage have not done well. Markets dont like co's with high debt levels since it hampers the cash flows and future prospects remains cloudy.

Low Debt = Lower Interest Paid = Higher Cash Reserve = Financially Strong Company

Low debt levels will also improve Cash Reserves of a company which of course can later be used for expansion or acquisition plans to eventually add on to a companies size and revenues. High cash reserves are also important to share dividends with share holders or give bonus issues etc which keeps investors happy.

Buy Quality, Not Quantity Or Else Be Prepared To Get Burnt

No matter how harsh is sounds, but its true. If you don't buy quality, soon you will be dumped with the quantity. All the bull market rally we have seen till now has been driven by quality companies and business only. It has not been a broad based rally, rather a much more stock specific bull rally.

So often, I see people looking to know which Penny stock tips or any other small cap or small price stock is best to Buy? They think there money is safe in those penny and small cap stocks and they are going to earn them a fortune. But does it happens so??

Most of the penny stocks and small cap stocks are highly manipulated by operators and the price moves as per as there own desires and the managements lacks quality. If you are lucky ( a rare chance ) you will make money or else you are anyway buying those unknown, unheard, unseen companies shares to get stuck only.

From here on also in 2011, stocks which fulfills the basic fundamental requirements will perform and do well, it shall not be a broad based rally, so buy the best stocks. We at Winfromus will find you the best stocks to buy from the Indian Stock Market for your Investment Portfolio.

Happy Investing!!

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