Make Money in the Stock Market By Identifying the Best Stocks to Invest In

Here are some top factors to consider when building your portfolio.

learn more about Roberto Liccardo

By Roberto Liccardo

Witthaya Prasongsin | Getty Images

Opinions expressed by Entrepreneur contributors are their own.

Trading on the stock market is something that many of us would like to try. Yet, there's an air of mystery and intrigue about it, as if there's some dark art involved. The truth is that while there is a lot to consider if you want to succeed in investing in stocks, there are some simple rules to study that even the major players follow. Even if a diversified portfolio is recommended for minimizing risks, particularly if you're starting off with stocks, the best way to secure benefits is to look for quality rather than quantity.

Good stock investments are based on timing and stock selection. In this article, we focus on the latter, although it is important to mention that long-terms investments on average are more profitable compared to short ones. Expert investors such as Warren Buffet advise to keep stocks for a minimum of five years, and if you don't have any immediate need for cash, possibly never sell them. Never be impacted by what the market is offering, and never let your emotions decide your trading moves.

The following are a few things to consider.

Related: Learn How to Grow Your Wealth in the Stock Market with This Training

Company stability and earnings growth

Investigate the company you are considering thoroughly. This means checking out how they have performed over the previous few years, what growth they have achieved and whether the company is stable in its growth. A company with a competitive advantage should always be at the top of your list. This may be due to its unique product line or brand loyalty, being an established name or having pricing strategies that appeal. Check at least the last 10 years of a company's earnings. If it hasn't had stable growth or is new to the market — such as IPOs — give a second thought about buying its stocks.

Stick with what you know

Do you have a particular knowledge of a certain industry that gives you an authoritative understanding of the market? If so, you need to check out that area for potential investment. Peter Lynch's most famous quote, "Invest in what you know," defines how to do a first screening of the stocks you should focus on. Of course, that doesn't mean to buy stocks of all the companies you know, but simply to start digging and researching on the companies' stocks you know something about rather than others.

What you know about the industry should give you an advantage in one or two vital factors, especially what the value of the market is and how stable it is likely to be in the long-term. Invest in what you understand, gather market research and check out the market for value in advance.

Explore who is involved in the company

Who is the CEO of the company you want to invest in, and what is their track record? What about the team beneath them? Do they have the proper credentials to assure you they will do a good job? It's never been easier to find out about people and their backgrounds, so it's worth looking closely at the management structure of a business before you choose to invest. Also, check that the company's debt is at the standard level for its industry. This will have a great effect on the performance of stocks in the long-term.

Avoid "interesting' risks

The idea of investing in stocks is to make money, and the best way to do so is to minimize your risks. It may appeal to you to invest in the exciting new tech company that promises great innovations, but it's a massive risk in a fast-changing market. Don't invest because you like the sound of a project; do your research and invest with your head. Also, make sure that the stocks you're interested in buying are those suggested by top-performing analysts, and they are on the top of their best stocks rankings.

Related: How to Minimize Risk and Protect Your Money During Times of Crisis

These are just a few of the tips that might whelp you find the right stocks, so look long-term, stick with what you know and investigate each of the above facts thoroughly.

Roberto Liccardo

CEO of Best Stocks

I have 15 years of direct and managerial experience in intensive digital marketing, analytics and finance. Currently, I'm working as CEO for Best Stocks.

Related Topics

Editor's Pick

Everyone Wants to Get Close to Their Favorite Artist. Here's the Technology Making It a Reality — But Better.
The Highest-Paid, Highest-Profile People in Every Field Know This Communication Strategy
After Early Rejection From Publishers, This Author Self-Published Her Book and Sold More Than 500,000 Copies. Here's How She Did It.
Having Trouble Speaking Up in Meetings? Try This Strategy.
He Names Brands for Amazon, Meta and Forever 21, and Says This Is the Big Blank Space in the Naming Game
Business News

I Live on a Cruise Ship for Half of the Year. Look Inside My 336-Square-Foot Cabin with Wraparound Balcony.

I live on a cruise ship with my husband, who works on it, for six months out of the year. Life at "home" can be tight. Here's what it's really like living on a cruise ship.

Money & Finance

Revenue vs. Profit: What's the Difference?

The difference between revenue and profit is vital to understand in order to run a healthy business. Read on to learn all about these basic economic concepts.

Business News

These Are the Most and Least Affordable Places to Retire in The U.S.

The Northeast and West Coast are the least affordable, while areas in the Mountain State region tend to be ideal for retirees on a budget.

Business News

A Mississippi News Anchor Is Under Fire for Quoting Snoop Dogg

WLBT's Barbara Bassett used the rapper's "fo shizzle" phrase during a live broadcast, causing the station to let her go.

Money & Finance

What Is Market Cap? Here's a Comprehensive Explanation.

Read on to learn how to calculate market cap, explore the different categories and understand how it influences investment analysis.

Career

Thinking of a Career Change? Here Are 4 Steps You Can Take To Get There.

Author Joanne Lipman on what experience and science tell us about successful job pivots.