4 Criteria for Choosing a Strong Stock During a Downturn

<h1>4 Criteria for Choosing a Strong Stock During a Downturn</h1>Author: <a title="Mike" href="http://www.articlesbase.com/authors/mike/4271.htm">Mike</a> Which is the best advice you ever received when come to stock trading? For me, the best stock trading advice I ever receive was to buy stocks based on a set of criteria. My mentor gave me this set of guidelines to help me in choosing strong stocks. Stocks that can withstand recession and grow in the long term. Let’s us look at the 4 important criteria of selecting a good stock. 1) Source of Cashflow Cash flow is the lifeline of every companies. No cash, no business and the stock crash. Thus it is important you identify the source where the companies generate its cash flow. Is that source reliable? Will it fall drastically during recession? 2) Is the Earnings Growth Increasing Yearly? You are generally buying stock for the long term. Thus it is important that the company current earnings are increasing year over year. Is the company usually exceeding the analysts’ expectations? Investors love to invest based on the company earnings potential. Therefore stocks with high earnings growth will make the most profits for you. 3) Is the Debt Level healthy? Warren Buffet never buys a stock with a high debt level. This is because such companies can go bust easily. You should also inspect the cash flow level. It should be positive and slowly increasing. This means you are investing in a healthy company that knows how to manage their money. 4) Are Management Strong,Capable and Creative? The company should have an imaginative and experienced management team. Look at GOOGLE, they have expanded into a multi-billion company. They have no debt and having plenty of cash.  This is the result of a capable and creative management. These was the 4 main stock trading advice that I use till now. The great investors used them as well. You will eliminate a lot of bad stocks just with these 4 simple trading advices.About the Author: Stock Trading can be very profitable if you understand the mechanics. <a href="http://www.forex-trading-study.com/clickhere/stock-trading-system.php">I am currently using this trading system</a> to help me make good profits. You can take a peek at <a href="http://www.forex-trading-study.com/clickhere/stock-trading-system.php"><a target="_blank" href="http://www.forex-trading-study.com/clickhere/stock-trading-system.php">http://www.forex-trading-study.com/clickhere/stock-trading-system.php</a></a>Article Source: <a href="http://www.articlesbase.com/">ArticlesBase.com</a> - <a href="http://www.articlesbase.com/day-trading-articles/4-criteria-for-choosing-a-strong-stock-during-a-downturn-758335.html" title="4 Criteria for Choosing a Strong Stock During a Downturn">4 Criteria for Choosing a Strong Stock During a Downturn</a>

Which is the best advice you ever received when come to stock trading?

For me, the best stock trading advice I ever receive was to buy stocks based on a set of criteria. My mentor gave me this set of guidelines to help me in choosing strong stocks. Stocks that can withstand recession and grow in the long term.

Let’s us look at the 4 important criteria of selecting a good stock.

1) Source of Cashflow

Cash flow is the lifeline of every companies. No cash, no business and the stock crash. Thus it is important you identify the source where the companies generate its cash flow. Is that source reliable? Will it fall drastically during recession?

2) Is the Earnings Growth Increasing Yearly?

You are generally buying stock for the long term. Thus it is important that the company current earnings are increasing year over year. Is the company usually exceeding the analysts’ expectations? Investors love to invest based on the company earnings potential. Therefore stocks with high earnings growth will make the most profits for you.

3) Is the Debt Level healthy?

Warren Buffet never buys a stock with a high debt level. This is because such companies can go bust easily. You should also inspect the cash flow level. It should be positive and slowly increasing. This means you are investing in a healthy company that knows how to manage their money.

4) Are Management Strong,Capable and Creative?

The company should have an imaginative and experienced management team. Look at GOOGLE, they have expanded into a multi-billion company. They have no debt and having plenty of cash. This is the result of a capable and creative management.

These was the 4 main stock trading advice that I use till now. The great investors used them as well. You will eliminate a lot of bad stocks just with these 4 simple trading advices.

Stock Trading can be very profitable if you understand the mechanics. I am currently using this trading system to help me make good profits. You can take a peek at http://www.forex-trading-study.com/clickhere/stock-trading-system.php

Rate this Article:

0 / 5 stars - 0 vote(s)

Re-Publish

Article Source: http://www.articlesbase.com/day-trading-articles/4-criteria-for-choosing-a-strong-stock-during-a-downturn-758335.html

Article Tags: Stock Trading Online, Stock Trading System, Stock Trading Advice

Related Videos
Related Articles
Ask / Related Q&A

Play

Fallout 3 Playthrough - Part 151 - Stocking Up

Play

How Exchange Traded Funds Work Part II - Gaurav Bhola

Play

Learn about Swing Trading

Play

Don't Get Married!

Play

Trading Is A Mental Game

Latest Day Trading Articles
More from Mike

Penny Stock Prophet Review - Great Penny Stocks Picker

By: ifoeor | 03/01/2010
If you've been interested in investing in penny/cheap stocks, you should use an analytical program to help you differentiate the good stocks from the bad. A low priced stock focused program will undoubtedly deliver the highest and most profitable picks because cheaper stocks are known for their greater volatility. This is a review of the great penny stocks picker, Penny Stock Prophet.

Selecting the Best Stock Trading Software

By: ifoeor | 03/01/2010
Most financial experts agree that right now we're in the middle of a recession. This means that there are a number of bottomed out stocks out there which are ripe for the picking. Using automatic stock trading software to guide you with your picks and point you in the direction of trend ready picks you can make a great deal of money without needing to have the experience of a real trader.

Penny Stocks Picks - Best Penny Stocks

By: ifoeor | 03/01/2010
There are a number of penny stocks picks programs out there today with all claim to deliver explosive picks right to via your e-mail for the you can make a nice profit in the market without having to perform the analytics yourself.

Penny Stock Prophet - The Best Penny Stock Pick Program

By: ifoeor | 03/01/2010
Most analysts and experts agree that our recession has just about ended and we are getting into the recovery phase. One effect of this is that it is one of the best times in our history to begin investing as there are a number of bottomed out stocks to be taken advantage of and large profits to be made.

Penny Stock Prophet Review - 2010 Stock Picks

By: ifoeor | 03/01/2010
Penny Stock Prophet is one of the latest options in the stock picker market niche. If you are looking to make some money in the stock market without devoting the time or having the knowledge which professionals have and use, this is a good option for you. There are some things to know about the stock picker before you get it, though.

Penny Stock Prophet - The Best Penny Stock Software

By: ifoeor | 03/01/2010
Penny Stock Prophet is a stock analytics program which only targets penny stocks as the name would suggest. I like trading with penny stocks because of their greater profit potential, but there is also a great deal of risk associated with it.

Penny Stock Recommendation Program

By: ifoeor | 03/01/2010
With our current recession winding down, there are a number of good investments to be made in the stock market. Many traders turn to using penny stock recommendation software to help them identify profitable trading opportunities as it takes a great deal of the mystery out of the stock market by doing all of the analytical work for you, making it ideal for an experienced and newer traders as well as casual traders alike.

Penny Stocks - Best Penny Stock Picks

By: ifoeor | 03/01/2010
Penny Stock Prophet is one of the few analytical penny stock picks programs out there which only targets and goes after the cheap stocks in the market. As a day trader myself, I know how volatile and potentially profitable these stocks can be if you can find the right one, so for the longest time I've been looking for a program devoted to these cheaper stocks exclusively which can do all the legwork for you and set you up in a position to simply make the trades yourself.

Instant Fx Profits – Looking At The Differences From Most Online Forex Trading Courses

By: Mike | 16/03/2009 | Currency Trading
I Am Seeing More and More Online Forex Trading Courses Nowadays. I Would Advise You to Shun Away From Most of Them. Simply Because Only 5% of the Courses Will be Worth Your Money and Time. I Have a Few Criteria for You to Choose a Good Forex Trading Course. This is What I Have Suggested to My Friends as Well Who Wants to Become a Forex Trader.

Do not Make These 3 Mistakes for Stock Day Trading

By: Mike | 05/02/2009 | Day Trading
Stock Day Trading can be very profitable if you understand the mechanics. I am currently using this trading system to help me make good profits. You can take a peek at http://www.forex-trading-study.com/clickhere/stock-day-trading.php

4 Criteria for Choosing a Strong Stock During a Downturn

By: Mike | 05/02/2009 | Day Trading
When I first started stock trading, a mentor gave me these 4 trading advices. I have benefited from them greatly. Click on to know more.

5 Reasons Why You Should Give Away Affiliate Marketing Ebook

By: Mike | 05/02/2009 | Online Promotion
Are you stuck somewhere with your affiliate marketing business? Do you believe giving away can make you more returns? Click on for more information.

Another 7 Affiliate Marketing Tips for You !

By: Mike | 05/02/2009 | Home Business
Affiliate marketing is one of the cheapest way to start your business. I have 7 great tips to kickstart your business. Come on in!

Affiliate Marketing Income - 2 Ways to Turn Them Into Residual Income

By: Mike | 05/02/2009 | Business Ideas
Are you trying hard to earn an income from affiliate marketing every month? While you are working hard, why not turn into a Residual Income for you !

Learn to Trade Forex – Avoid These 5 Common Deadly Mistakes (part 1)

By: Mike | 16/01/2009 | Currency Trading
Did anyone tell you that making money in forex is about avoiding making mistakes? I am sorry to say it is not about doing the right things. Even if you are doing the right things in forex, you are not guaranteed to make money as forex market is unpredictable.

Learn to Trade Forex – the 8 Characteristics of a Successful Trader

By: Mike | 16/01/2009 | Currency Trading
Forex Trading is like any specialized profession. You need many years of education and practicing before you can master it. Many do not agree with this statement and have ended up in financial ruin.