Would you look at the Return on capital employed to invest shares in a company?
There are so many factors that determine a profitable stock, to just look at one is doing yourself a disservice. Personally, I look at projected earnings to start. Projections are future looking so rarely are they 100% accurate. But if the company and experts are predicting an up trend in earnings it’s usually a good sign. A down trend in earnings is typically bad. Then look at the Price/Earnings ratio. This ratio can tell you if this stock is undervalued or overvalued compared to its peers. So, you need to compare the P/E to other companies of similar size in the same industry. Then I consider the industry the stock is in. Do I think that industry is headed for good or bad times ahead. In 2009, financial stocks roared back and made huge returns. What industry is going to explode in 2010? Auto, green technology, computer technology? Look at the big picture of the market and the future of the stock you’re researching.
