When you buy a share, you become a part-owner of a company. You have a vote in how it is run and share in its profits. But share prices can be very volatile and it's important to do your research in advance.
While there are many different approaches to selecting stocks (another term used for company part-ownership), they can broadly be broken down into four styles: growth, quality, value and momentum.
But all stockpickers share a common goal: for the share price to rise. This means you want to find companies that you think will be worth more tomorrow than they are today.
There are many ways to value companies, as we explore in the fifth guide in our investing explained series. Download the guide to begin your journey to being a successful stock picker.
The guide includes:
- What is a share?
- How does a company make you money?
- Determine your investment style
- How to work out a company’s value
- Decide if you think the price is right
- Justifying a higher or lower valuation
Or listen to our podcast, where the IC’s Mary McDougall chats with IG’s chief market analyst Chris Beauchamp and the IC’s former associate editor Algy Hall about how to pick shares.
They discuss different approaches to valuing companies, how to work out when the price is right, working out when to sell, the impact of fees and much more.
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This article is sponsored by IG.