What's the Best Stock to Spend In?

If you're similar to stock market investors you've struggled with finding the very best stocks to invest in.

There are several approaches to find the best stocks to invest in. But first you need to decide what method is most effective for you.

Basically you will find two main kinds of stock market investing

1. Investing in growth stocks

2. Investing in value stocks

Growth stocks are companies that are growing fast in earnings. There are a lot of hi-tech and medical growth stocks.

Value stocks are stocks that are undervalued because they trade at a cheap set alongside the company's fundamentals (i.e. earnings, dividends, sales etc...)

Growth stocks generally will fatten your banking account faster but there is more risk whereas value stocks will generally grow at a slower more sustainable pace but probably won't give you ulcers.

Here's what some investors look for in a growth stock (based on my knowledge of the National Association of Investors Corporation (NAIC) criteria):

1. Strong Earnings Growth - either quarter to quarter or year over year

2. Strong Forward Earnings Growth - analysts estimate what earnings will soon be for the following quarter or year, when they estimate growth that's a plus.

3. Profit margins - you'd prefer the business to be making a large amount of profit to sustain further growth

4. Return On Equity (ROE) - look for growth in ROE or a reliable ROE

5. Doubling in 5 years or less - you'd prefer the stock to double in 5 years - look at what the analysts estimate for price potential.

Also here's what some value investors look for:

1. Shares price below intrinsic value

2. Low Price to Earnings (P/E) ratios

3. Price to Earnings Growth (PEG) ratio below 1 is good

4. Stock price is less than tangible book value

5. A debt to equity ratio below 1

6. The company's assets should be much more compared to the company's liabilities by at least an issue of 2

7. Dividend Yield within 1/3 of the total amount of the AAA bond yield

8. Earnings growth of at least 7% per year for days gone by 10 years

You will find all sorts of other ways to find the best ways to invest stock to invest in but this will give you a starting point.