In recent years, the number of investors in the stock market has skyrocketed. You don’t have to be a genius of the markets and finance to get into it. Of course, buying a stock can be a real headache for those of you who are just starting out. But all you need to do to get a jump on the increasingly open world of the stock market is to follow this guide to the very end. As a bonus we will give you through our analysis the best ways to choose a stock and 05 promising stocks in various sectors in which you could invest in this new year 2022.
- I-What Is A Stock Or A Share?
- II-Why Do You Need To Buy It?
- III-How To Choose A Profitable Stock?
- IV-05 Business Sectors And Stocks To Invest In
I-What Is A Stock Or A Share?
Simply put, a share is a fraction of the property of a company that it issues over a specific period of time. In short, it represents an interest in the assets and earnings of the company. The more shares you buy, the more interest you have.
II-Why Do You Need To Buy It?
Undoubtedly, you have thought through the most likely and safe way to increase the value of your wallet. Let us give you 02 little points of confidence in your choice of stocks.
1-Net Increase In Capital
Stocks are generally much more profitable in the long run than bonds. But don’t forget that stock prices are not static, they are in constant fluctuation.
2-Reduced Tax Obligations
The acquisition of stocks allows you as an investor to benefit from a tax break.
III-How To Choose A Profitable Stock?
Here are 03 criteria that will allow you to choose the best one to invest in.
41-Evaluate The Risks
It is important to make an analysis of the degree of risk of the company you want to invest in. In this respect, you should check the data related to the economic and financial health of the company in question, such as :
– The stock price: It represents the value of a stock at a given moment.
– The income generated by the company
– The cash-flow: it is a good way to understand the solvency and sustainability of a company
– The debt ratio
– Earnings per share: (EPS) represents the consolidated net profit divided by the number of shares comprising the capital of a company.
– Equity: of a company corresponds to its financial resources (excluding debt).
NB: the more risk, the higher the reward for the shares you bought, but this is not recommended.
2-Take A Position At The Right Time
When you buy a stock, you must bet on the long term. This way, you will be able to appreciate the profits that you will make thanks to the results obtained by the companies that have gone through difficult stages, which will not benefit you at all if it was in the short term. However, before taking a position you should review some indicators.
– The DMI, for Directional Movement Index. The RSI, which stands for Relative Strength Index. And the Ichimoku indicator.
3-Diversify Your Stock Portfolio
Try to vary your investments. Buy your shares in companies from different sectors of activity and different zones. This will allow you to lose just a portion of your portfolio in the event of the downfall of a company in which you have invested in the market.
IV-05 Business Sectors And Stocks To Invest In
As said, to maximize your income. The assets of your portfolio should be spread over several sectors. Given the volatility of company prices, we will omit specifying them in particular to avoid any guesswork.
1-ICT (New Information And Communication Technologies)
It is the most awarded. In constant evolution, it knew to assert itself in these last ones during the crisis of COVID-19 with the shutdown and closures of the leisure centers, inaccessibility to the classrooms and to the offices.
Some of the companies you will be able to invest in are: Netflix, Walt Disney, Google, Facebook, Uber technologies, Amazon and Alibaba Group.
2-The Telecommunication Sector
Omnipresent in the daily life of everyone and deeply linked to the first sector, it has also been able to do well, especially during the period of the pandemic. With solid profits generated by these companies that consumers will always use, you can consider investing part of your capital in them.
You can buy stocks like Orange, AT&T, QUALCOMM, Verizon Communications or even MTN.
3-The Pharmaceutical Sector
This sector generates billions of dollars on its own. Especially with the resurgence of a pandemic and the continuous increase of the population, which increases the need for health care
We can count among these companies: Sanofi, Pfizer, Novartis, AbbVie or Johnson & Johnson.
4-Consumer Staples Sector
It is impossible to talk about the growth sectors without even touching on this one. At this point, I bet you also have some supplies in your fridge or pantry. Well, the fact is, you and I will always spend money on food. And that benefits the companies and you the future investors.
You have: Carrefour, Walmart, Bidfood, CASINO or Steinhoff International.
5-Renewable Energy Sector
It is becoming more and more popular in the market. Renewable energy is the future of the worldwide power production. The market share of this sector will only increase in the next twenty years. So investing in it is a better way to make your portfolio profitable in the long term.
Some companies: Renewable Energy Group, Suncor Energy, Azure Power, Ascent Solar Technologies or First Solar.
Let’s make a quick point. We know that owning a stock (i.e. the share that a company would have issued) is very worth it in the long term, as long as you have done the necessary analysis before acquiring it. Also, we have given you a list of profitable sectors and stocks in which you could invest. It is up to you to do the necessary research before getting involved.
Ah one last point, if you are a beginner in the market. There are two basic mistakes to avoid: being too impatient and expecting too much from a stock and following the crowd’s advice.