Factors To Consider Before Investing in Stocks Under Rs 500
Picking the right stocks to build a profitable portfolio is not easy. One needs to consider a bunch of factors while investing in a certain stock.
Some of the prominent factors to keep in mind while buying stocks available below Rs 500 are-
Performance of the Stock
One of the first factors to consider while buying a stock is analysing its performance. Simply check how it has flourished over the last few years and what forthcoming prospects it has in its store.
Analysing the stock’s performance can help you get a clear glimpse of the company and gather some insights about its market standing compared to the competitors.
Volatility
We all are familiar with the fact that stock markets are highly volatile. Hence, before investing in a stock having a price below 500, just check the stock's volatility. If your risk appetite permits investing in a volatile stock, go ahead, else look for other options.
Revenue Growth
Another notable factor to remember is examining a stock's revenue growth. Since earning and revenue made by a company directly denotes its performance and growth, it is essential to go through it once.
By comparing the growth of revenue of the companies, it will become much easier to pick the apt stocks for your portfolio.
Company Size
The size of a company is another significant factor that affects investment decisions. It plays a pivotal role in the amount of risk you would like to bear.
Hence, based on a company's market capitalisation, simply check whether the company size is in accordance with your risk palate.
Fundamental Ratios
Picking the right stocks needs some calculative efforts as well. Before making an investment choice, it is vital to go through some key ratios such as Price-to-Book-Value Ratio, Price-to-Earnings Ratio, Debt to Equity Ratio, and more.
Getting such numbers will make the investment choice lot easier and give you a peek into the company’s market standing.