Best Performing Stocks – Golden Luck For Investors

Best Performing Stocks – Golden Luck For Investors

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Every investor has a desire to own stocks that grant them high profits. In order to own such stocks, one must be kept updated regarding the recent financial updates along with careful analysis into financial reports of leading corporations that maintain a stable financial position in the financial market. This analysis by an investor is based upon certain criteria that inform about the financial health of a corporation. Such criteria includes ratios such as ‘Earnings per share’, ‘Return on Equity’, ‘Return on assets’, ‘Price to earnings’ ratio, ‘Dividend payout’ ratio and many more. Are these ratios a huge financial rocket science? CERTAINLY NOT… they are as simple as comparing these individual ratios with the industry average ratios to know the financial standing of the company, simple!

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A Closer Look

Let’s closely analyze how these ratios are useful tools in the financial scrutiny of best performing stocks. First comes ‘Earnings per Share’ primarily known as “EPS” that indicates the financial profitability of the company. Observing the EPS over the last 5-10 years provides a trend of the company’s earning capacity. Moving on we have price to earnings ratio. This is an indicator that compares a company’s EPS with the price that the current investors are willing to offer for its shares. Higher EPS are influential to high share prices. Next we have is ‘return on equity’ ratio, which indicates the company’s earning that it brings to the investment of shareholders. But one should be careful in judging this indicator, as high debt burden on the company may artificially inflate this ratio thus indicating false profitability. Another ratio in line is the “Return on Assets” ratio that compares the company’s earnings to the assets the company current holds. If the company is not subjected to high debt, then a rising ‘Return on Assets’ indicator may signal a high price to a potential investor ! Another two strong indicators are the ‘Dividend Yield’ and the ‘Dividend Payout’ ratio. The strongest attraction that any stock holds is its ability to provide dividends or profits. The ‘Dividend Yield’ indicates the amount of dividend that could be generated upon each share, but this ratio alone is not useful without the ‘Dividend payout’ ratio which actually tells that even if a company can generate high dividend, how much actual amount is it willing to payout as dividend rather than keeping up the amount back in the company as its retained earnings.

Other aspects:

Other than financial ratios, a potential investor should also keep in mind different sectors and industries in the economy such as petroleum sector, pharmaceutical sector, fast moving consumer goods (FMCG) sector. One should allocate resources to the relevant direction of interest. By far, the best performing stocks in the world in 2013 till now belong to the Boeing Corporation at $130 which is a United States based air-craft, satellite manufacturing company, Nike Inc. an American multinational design, equipment and clothing, footwear and sport accessories manufacturer at $77.95, American Express, a multinational financial Corporation at $80.68, DuPont, an American Chemical Corporation at $58.60 and finally 3M Corporation which is an American multinational manufacturing company at $122.60.

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