How does the roi relate to buying stocks?
can you use just the roi to pick stocks?
Answers: No- ROI stands for return on investment- that is the proportional growth of the money you invest within a company expressed as a percent of the original investment. Ex. if you invest 500 dollars and your investment becomes worth 750, next you have a %50 ROI- the 250 gain is %50 of 500 dollars. You can't use this to pick stocks, just go-between how well your pick was afterwards.
Use ROE and ROA for company metrics- ROE is Ret. on equity-the return the co have made on the stockholders investments- look for companies above %18 ROE , and ROA is return on asset- how much the co is returning on its property- Plant/materials/equipment etc. Look for ROA above 15- varies by sector though.
One should not depend only on one ratio
Do more homework!
Better do more home work beforehand.
It is better than crying afterwards
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Answers: No- ROI stands for return on investment- that is the proportional growth of the money you invest within a company expressed as a percent of the original investment. Ex. if you invest 500 dollars and your investment becomes worth 750, next you have a %50 ROI- the 250 gain is %50 of 500 dollars. You can't use this to pick stocks, just go-between how well your pick was afterwards.
Use ROE and ROA for company metrics- ROE is Ret. on equity-the return the co have made on the stockholders investments- look for companies above %18 ROE , and ROA is return on asset- how much the co is returning on its property- Plant/materials/equipment etc. Look for ROA above 15- varies by sector though.
One should not depend only on one ratio
Do more homework!
Better do more home work beforehand.
It is better than crying afterwards