Published: 14th Aug 2024
By: Value Research
Holding too many stocks can lead to over-diversification, diluting your returns. So, periodically trimming your portfolio is essential. But which stocks should you exit? Here are three simple strategies to guide you.
Start off by identifying companies with weak financials. If a company has a high debt-to-equity ratio, low ROE (return on equity) and a negative cash flow from operations over time, it’s time to get rid of it.
Stay invested in business you understand. If you are unsure about a company’s business model, how it generates revenue, its competitors, the industry it operates in, etc., it might be wiser to let it go.
It isn’t necessary that a stock that generated hefty returns in the past will continue to do so in the future.To determine if a stock still has growth potential, it's crucial to evaluate specific factors. Discover these key indicators by clicking the story link below.