10 Tips to Identify a Hot Stock
4) Price Earnings Ratio (PE Ratio)
Price earnings ratio (PE Ratio) tells about the valuation of stock. P/E ratio is valued by dividing the stock price by annual earnings per share. A higher PE ratio reflects good value priced stocks. A higher PE expresses that investors are hoping better growth while a lower PE express that the company is moving towards financial catastrophe.
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5) Investments by Financial Institutions / Mutual Funds
Before buying a stock, don’t forget to look at the investments made by the financial institutions / mutual funds in a stock. It is pointer on how the stocks are rated whether good or bad by the research analysts from these institutions.
Where the mutual funds houses or financial institutions make regular investment in stock, the reason for this could be that they are more confident about this stock performance among other stocks trading in the market. Hence it is a good stock to buy.
