Things To Consider Before Investing in Stock Under ₹10
Investing in stocks priced under ₹10 is considered to be highly risky, as these stocks are often associated with smaller companies and may be more volatile. Here are some important factors to consider before investing in such stocks:
- Company Financials: Check the company's revenue growth over the past few years. Look for consistent and positive net profits. Assess the company's debt levels. A high debt-to-equity ratio may indicate financial stress.
- Size of the Company: Smaller companies may have higher growth potential but are also riskier. Consider the market capitalisation and whether it aligns with your risk tolerance.
- Understand the Business: Make sure you understand the company's business model. Companies with a clear and sustainable business model with a competitive advantage are generally more attractive.
- Earnings Growth : Look for companies with consistent and positive earnings growth. A rising EPS indicates that the company is profitable.
- Valuation : Consider the valuation ratios, such as the P/E ratio. A low P/E ratio relative to industry peers may suggest the stock is undervalued, and a higher P/E ratio indicates that the stock is overvalued.
- Cash Flow : Positive cash flow is crucial for the company's operations and growth. Analyse the cash flow statement to understand the company's financial health better.
- Risks and Challenges : Identify and evaluate potential risks specific to the company and its industry. This could include regulatory challenges, competition, or economic factors.
Remember that investing in stocks, especially those priced under ₹10, carries inherent risks. Success in investing in stocks under ₹10 requires diversification, doing thorough research, and having a long-term view. It is highly advisable to talk to a financial advisor before deciding on any investments.
How To Invest in Stocks Under ₹10?
Investing in stocks below ₹10 via Angel One is easy. Simply follow these steps:
- Log in to your Angel One account.
- Click on the search icon to find your desired stock under ₹10
- Now, place your buy order. Simply click on the ‘Buy’ button, enter your desired quantity, and select the order type.
- To complete your transaction, click on the ‘Buy’ button.
If you don’t have a Demat account with Angel One, you can open one for free online within minutes.
