Shortlisting Companies for Detailed Analysis

This article is a part of the series of articles "Selecting Top Stocks to Buy".

In the first article of this series (Getting right perspective towards Investing), we discussed about getting the right perspective towards stock investing and the requisite qualities for becoming a successful investor. In the second article of this series(Choosing the Stock Picking Approach suitable to you), we learned about different stock picking approaches available to an investor and the guidelines for selecting the stock picking approach suitable to her.

The current article in this series, aims to highlight the necessity of shortlisting a few companies for detailed analysis, out of the thousands of companies available to an investor. We would also learn about various tools, which an investor can use for shortlisting these companies.

As per Bombay Stock Exchange website, at September 14, 2014, there are 5,471 stocks available for investing. Each of these stocks represents a company running a unique business. Business of each of these companies is different from all the other companies whether they are from the same or different industries.

For example, a pharmaceutical company will have a business entirely different from a telecom company. Moreover, within the pharmaceutical companies, a company selling its products in Indian market will have a very different business from another company, which sells its products in overseas markets. Among pharmaceutical companies, which focus on overseas markets, a company, which sells its products in US & other developed countries will have a different business than the company, which sells its products in Africa & other developing countries.Therefore, investing in any company will expose an investor to a business that would be very different from investing in any other