Wise stock market investing presents a challenge for average consumers hoping to build their financial profile. If you want to try your hand at the market, take a few easy steps first to educate yourself on its workings, and next, on each stock you are considering.
The Stock Market Basics
If you’re considering investing in Yelp stock or any other company, chances are you already read financial news and opinion. If not, start right away, and review some profiles of specific companies. The more you read, the more familiar you will become with investment terms and the differences among possible businesses.
When it comes to the actual process of picking a stock and investing, it pays to enlist the help of an online educational tool. Use the free apps from a site like Drive Wealth Education to create an investment plan, to learn about evaluating stocks, and to create a practice account for virtual investing, before you use your own hard-earned dollars.
Evaluating a Company
Once you identify an interesting business, you can delve further into its background and look for indicators of future performance. Read everything you can about Yelp or another attractive company. When you narrow down your options to a few possible choices, apply the basic stock market rules to evaluate a stock pick.
Before investing, you need a firm grasp of the terms used by analysts, in order to glean useful information from their statements. Look at the company’s P/E ratio, or price to earnings ratio. This is measured by dividing the share price by the net annual income. The result is a number that can be compared to the broader market P/E ratio, to decide if your pick is more expensive or less expensive than the market.
Let’s consider stock in Yelp, a very well-known brand name. Monitor the latest quarterly pronouncements from financial authorities for a balanced view of the company’s pros and cons, and you’ll learn:
- Currently, many analysts take a dim view of the company’s Q4 2014 results, and they are critical of future plans to invest in more marketing and additional sales staff.
- The same analysts are encouraged by Yelp’s success in growing consumer transactions and mobile views.
- At the same time, others see long-term growth of revenue as an optimistic indicator. Some European banks feel that Yelp’s monetization potential is strong, outweighing the negatives stressed by others.
All in all, Yelp is a perfect example of the challenges in picking stocks. You probably know the site as a review source for information about restaurants and other local businesses you frequent. You may even enjoy using it as a social site where you can discuss reviews with fellow users.
As an involved Yelp visitor, or as a newly-informed reader of the analyses we’ve mentioned, you know that Yelp is working to build its mobile profile for providing local information.
Once you have a picture of the pros and cons for a company, add in your personal financial profile and what your goals are for building it. What is your budget for investing? How much can you safely risk on a stock? Think about whether you want to invest for the long-term or for a short-term result.
Arm yourself with knowledge and enlist a strong ally in your investment planning with help from Drive Wealth Education.
