{"id":614,"date":"2020-10-21T11:56:03","date_gmt":"2020-10-21T11:56:03","guid":{"rendered":"https:\/\/www.invest19.com\/blog\/?p=614"},"modified":"2020-10-21T11:56:05","modified_gmt":"2020-10-21T11:56:05","slug":"3-filters-which-investors-should-not-avoid-while-selecting-a-stock-for-portfolio","status":"publish","type":"post","link":"https:\/\/www.invest19.com\/blog\/3-filters-which-investors-should-not-avoid-while-selecting-a-stock-for-portfolio\/","title":{"rendered":"3 filters which investors should not avoid while selecting a stock for portfolio"},"content":{"rendered":"
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It has always a controversial issue over scrutinization of\nstocks before adding them in portfolio. No matter which kind of investor you\nare, which salary class you belong and which ideology provided by market\npundits you are banking upon you will always filter the stocks through many\nfunnels before investing into. Phases of investment have changed a lot as the\nold school of investing have favored for value investing while new school of\nthought is inclined towards growth stories. But, history has always rewarded only\nthose investors who have relied upon their own thorough analysis rather than following\nthe tips and consultations from market veterans. Equity markets have always\ndemonstrated that an investor cannot turn the table in times when economies are\nfighting with systematic risk as the concept of diversification get handcuffed\nand portfolios turn deep red. While, stocks with three important filters\ndiscussed below claims to nosedive less during weakness and reverse faster\nafter stagnation.<\/p>\n\n\n\n

Following are the filters which must be kept in mind before\ninvesting in a stock:<\/p>\n\n\n\n

Penetration of the\nMarket: <\/strong>The unconventional school of investing has always favored for\ngrowth stocks and growth of a company is inversely proportional to penetration\nof the market. Less penetrated market have large room to explore themselves and\nadd more potential customers into their total clientage while highly penetrated\nmarkets provides less opportunity for companies to explore. Investors should\nprefer those stocks which have operations in less penetrated markets as their\npotential has not unlocked yet due to uncatered customer base.<\/p>\n\n\n\n

High Entry Barriers:  <\/strong>Whether the orthodox or unconventional\nschool of thought, it is always advisable to enter into those companies whose\nmarket have high entry barriers. It is beneficial to buy stocks which are\noperating in blue ocean (product with high entry barriers) as these companies\nhave more control over pricing while the companies having operations in red\nocean market (product with low entry barriers) witnessed blood on the roads due\nto less or no control over pricing so they requires to spend on advertising and\nsales promotion to keep up their sales. Moreover, these companies never enjoys\nhigh premium due to easy availability of their product unless they form a\ncartel.<\/p>\n\n\n\n

High dependency on\ndebt funds: <\/strong><\/p>\n\n\n\n

The acquisition channel of funds for augmenting the working capital requirements or investment for expansion in business has always been controversial as fund raising from debt market slices the earning per share but raise concerns for equity shareholders due to more exposure. There is no denying the fact that inculcation of debt component into capital mix brings tax benefits on interest obligations. While, history has seen favoring companies which are debt-free due to no cost in times of recession\/depression.<\/p>\n\n\n\n

Also Read: Sugar Stocks: Do they have the X factor<\/a><\/p>\n

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It has always a controversial issue over scrutinization of stocks before adding them in portfolio. No matter which kind of investor you are, which salary […] Read More<\/a><\/span><\/p>\n","protected":false},"author":1,"featured_media":615,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,7],"tags":[],"class_list":["post-614","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stock-market","category-investment"],"_links":{"self":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/614","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/comments?post=614"}],"version-history":[{"count":1,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/614\/revisions"}],"predecessor-version":[{"id":616,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/posts\/614\/revisions\/616"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/media\/615"}],"wp:attachment":[{"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/media?parent=614"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/categories?post=614"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.invest19.com\/blog\/wp-json\/wp\/v2\/tags?post=614"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}