How do I know when a stock is good or not, What do investors look for in a stock in order to pick it?

I know you cant really predict the future, and decide which stocks are good. But what do investors look for in a stock in order to pick it. Is it the P/E, Dividend, Volume?|||To research a stock you should do the following...





1) http://finance.yahoo.com/ search the company here


2) look at the P/E ratio if its over 25 that means its a risky company, if there is no p/e that could mean the company is new (which could be risky)


3) look at the 52 week high %26amp; low ( you can even calculate the percent increase and decrease by taking the current price (-MINUS) the 52 week high or low and divide it by the 52 week high or low)


4) Take a look at the companies website (look at their CEOs or see what upcoming products they have)


5) check the industry the product is in (make sure you know what the company does!)








Hope this helps!|||look for the earnings per share value|||There are two ways a stock can make you money





1) the company pays you a dividend


2) the stock price goes up





I) Dividends are easy to explain. When you buy a share of stock you become part owner of a corporation. Corporations tend to earn money. The board of directors (elected by the shareholders) as well as the CEO will decide each quarter whether or not to pay some of the company's earnings to shareholders as a dividend. If so, each share is entitled to a portion of that dividend. The higher the dividend payment and the lower the stock price, the higher the rate of return you earn. This is measured as an annual rate and is called the "dividend yield".





II) Sometimes it makes more sense for a company to keep its earnings instead of paying them out as a dividend. Why would they do this? Because they know that by reinvesting into new assets (planes, stores, restaurants, hotels, oil fields, whatever the business does) that they will be able to earn more money the next year. As a company's earnings grow, the value of the company grows. Think about it, would you pay more for a company that earns $10,000 per year or one that pays $10 million per year?? Common sense right?





So as a company's earnings grow, the company becomes worth more money (leads to higher stock prices). Along the way a company may or may not choose to pay dividends, however whatever is paid as a dividend cannot be used to help grow the company (of course).





The value of a company then really depends on how much a company earns, how quickly (if at all) those earnings are growing, and how much the company pays as a dividend. If a stock's price becomes very low a company may also choose to buy back shares of stock. This reduces the number of shares outstanding and increases the value of each share (thus creating growth). For companies that have good management who choose to do this, this helps keep share prices propped up.





Some companies are very consistent and easy to predict, others are not. For example certain utility companies pay annual dividends which have been growing constantly for decades. This is regardless of recessions, because even in a recession people need electricity.





Long story short the fair value of a company is where the rate of return given by the stock's current price (which is the sum of the expected dividend payments and the company's expected growth rate) is equal to other investments which are equally as reliable (and predictable).





More predictable companies (consumer staples or utilities for example) justifiably demand higher prices than less consistent/predictable companies (airlines, oil, retailers, or others).