How to Analyze profitable Stocks as a Beginner

• Updated September 4, 2021

Whether you are a trader or an investor who has just started their Investing journey, you can Analyze Stocks to determine the financial and business health of a company before actively investing in them. So in this article, you’ll learn How to Analyze Profitable stocks as a beginner.

Numerous factors decide whether a stock is worthy enough or not, which you’ll come by once you’re familiar with the Market. To learn the process of picking the best multibagger stocks according to your needs, you first have to start implementing by Investing.

Analyze Profitable stocks as a beginner


Investing in well-established companies might sound more secure and a great investment decision to the majority of beginner Investors, though it’s not how it seems.

Why it’s Important

Market research and Fundamental analysis are always needed before you’re investing in a Company. It’s very obvious that once you’ve invested in a well-reputed and Established company, you’re securing your investment one way or the other.

Though we must compliance it’s not the case for every scenario, and the reason is that there are always chances of having multiple overvalued stocks in vast fields of reliable companies. No one can rely on a company just by judging how wonderful a company is by looking at its current market value and rock-solid business model.

For example, ‘Yes Bank‘ was known to be a really successful Bank a few years ago where their stocks were hanging around Rs. 330+, though at the present time, the scenario has changed quite a lot. Their Share value has decreased more than 90% over time.

Thus it is quite an important factor that an attentive Investor has to take care with Stock Research tools like Screener or Ticker.

finology ticker stock analyze How to Analyze profitable Stocks as a Beginner

As a beginner Investor, while you’re getting into Stock analyzer platforms, there are certain terms that you may need to go through in order to understand and Analyze a stock properly. Though there are multiple complex terms that can be mastered over time, let us only take care of the basic and necessary terms.

Debt: A company cannot perform well and reward its shareholders as expected if it has a huge Debt, which makes this one of the major factors to take care of before investing in a company. With Debt. Companies have to repay the debt and also pay interest on the money they borrowed before anything else.

In short, Only Invest in a company if it does have a debt/equity ratio of less than one.

Related: How to Start Investing in Stock Market

Free Cash Flow: Free Cash flow can be described as the cash flow available for the company to repay creditors or pay dividends and interest to investors. It’s not compulsory for a listed company to publish its Free Cash Flow (FCF) Details, though it is considered to be a quite useful factor in the process for Stock Analysis process.

Lows & Highs: If you’re investing through any Discount broker or if you have used stock Analyzer platforms it’s very obvious that you might have seen graphs as well as ‘Highs and Lows’.

On some platforms, there is a feature provided “52 Week High & Low”, which represents the Highest and the Lowest price of a Specific stock within a timespan of the previous year.

highs and lows of market How to Analyze profitable Stocks as a Beginner

This feature can really come in handy to easily find out if a stock is overvalued or undervalued at that moment.

Financial ratios

P/E Ratio: The Price-to-Earnings Ratio or the P/E ratio is the ratio of the current price of a company’s share in relation to its earnings per share. It presents the amount of money an investor is willing to invest in a single share of a company for Re. 1 of its earnings.

So, A Higher P/E Ratio represents a higher chance of growth expectations in the future from its investors.

Earnings Per Share: EPS or Earnings per share depicts the earning of a stock on each share of its stock. As it is assigned a rating of 1 to 99, the maximum is considered the best.

Until a company’s EPS is compared with its fellow competitors, it does not represent anything significant.

Return on Equity: ROE or Return on Equity is a financial ratio that indicates how well a company is managing the capital that shareholders have invested in it. Higher ROE portrays a company’s management is efficient and generating income and growth from its equity financing.

Analyze future prospects

As Investments are done keeping the future probabilities in mind, whereas there is hardly any good investment looking for a short-term return except Trading (Intraday). Therefore, always tend to invest in a company with strong long future prospects and established fundamentals.

For Instance, you can create a chart of what you might be using or what you might not use at all after 15-20 years from now. That chart can help you understand what your basic necessities would be in that specific era, which is hanging around at a lower market value in the current time.

Related: Mistakes to avoid as a Beginner Investor


The process of becoming a successful investor can not be accomplished in a day or a month. You’ll fail you’ll lose money, there will be various obstacles on your path to success. Eventually, the journey of being a successful investor will bring triumph to you.

In order to become a good investor, you need to take action by investing amounts in the Stock market. Only theoretical knowledge won’t be enough to become an expert in the Financial field. Even if you’re not actively getting into the area of expertise, it’s necessary to know the basics of investing even as a Geek.

notetip How to Analyze profitable Stocks as a Beginner

Quick Tip: It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

This was a quick and short tutorial about How to Analyze profitable Stocks as a Beginner, You can also visit our related Articles on ‘How to start Investing‘ which might give you a head start if you’re completely new to investing.

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An aspiring BTech Electronics and Communication student, obsessed with Coding, Gadgets, and Blogging.

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