Six parameters to look for in a company before investing

Say you want to invest in a company. If you are an experienced investor, then you know how to proceed. But what if you are a budding investor? Or someone who wishes to know the parameters to look for before deciding whether to invest? What do you do? First, you start by gaining an understanding of the company. This is not just about knowing what products and services the company offers. You need to understand the company's business segments, how it manufactures its products and how it markets them, who are its customers, how the company makes money and many more such things. If you find that you are unable to answer such questions, then move on to another company. Stick to companies that you can understand. Second, understand the industry the company operates in. This would involve figuring out whether it is cyclical (i.e., moves in relation to the health of the economy), how many competitors the company has, what is the competitive intensity, is the competition purely on price, what are the operational d

This article was originally published on July 05, 2022.