What's the Best Stock to Spend In?

If you're similar to stock market investors you've struggled with finding the very best stocks to invest in.

There are many ways to find a very good dollars to invest in. But first you will need to choose what method is most effective for you.

Basically there are two main kinds of stock market investing

1. Investing in growth stocks

2. Investing in value stocks

Growth stocks are companies which are growing fast in earnings. There are always a large amount of advanced and medical growth stocks.

Value stocks are stocks which are undervalued simply because they trade at a cheap compared to the company's fundamentals (i.e. earnings, dividends, sales etc...)

Growth stocks generally will fatten your bank account faster but there's more risk whereas value stocks will generally grow at a slower more sustainable pace but probably won't give you ulcers.

Here's what some investors try to find in a growth stock (based on my understanding of the National Association of Investors Corporation (NAIC) criteria):

1. Strong Earnings Growth - either quarter to quarter or year over year

2. Strong Forward Earnings Growth - analysts estimate what earnings is likely to be for another quarter or year, if they estimate growth that's a plus.

3. Profit margins - you'd prefer the business to be making a considerable amount of profit to sustain further growth

4. Return On Equity (ROE) - try to find growth in ROE or a well balanced ROE

5. Doubling in 5 years or less - you'd choose the stock to double in 5 years - look at what the analysts estimate for price potential.

Also here's what some value investors try to find:

1. Shares price below intrinsic value

2. Low Price to Earnings (P/E) ratios

3. Price to Earnings Growth (PEG) ratio below 1 is good

4. Stock price is significantly less than tangible book value

5. A debt to equity ratio below 1

6. The company's assets should be more than the company's liabilities by at least an issue of 2

7. Dividend Yield within 1/3 of the quantity of the AAA bond yield

8. Earnings growth of at least 7% per year for yesteryear 10 years

You can find a number of other ways to find a very good stock to invest in but this should provide you with a starting point.