(Filed Under stock picking, stock tips, stock advice, hot stocks )

By Robert Marsh

Stock investments and stock picking can be a tricky thing to do. When analyzing which stocks are the best to invest in, be sure to look at the EPS. It stands for Earnings per Share. And it is the part of a Company’s profits allocated to each share of outstanding stock.

It is calculated as: Net Income divided by Number of Outstanding Shares of Stock.

As you are calculating the EPS, it’s more accurate to proceed with the weighted average number of outstanding shares over a period of time. The reason is because the number of outstanding shares can vary over any given period of time.

(Article Tags include stock picking, stock tips, stock advice, hot stocks )

EPS is a very important figure that all investors should understand and calculate when trying to find stock investments and the top stocks to invest in. It is important to know what exactly to look for when you find the EPS for a certain stock. A good blue print to go by is to go back in time and look at the previous year EPS for the Company and see how it compares to the current year EPS. If there has been a 20% increase in EPS from year to year then it might just be a good candidate to invest in.

Also, an important aspect of EPS that many consistently ignore is the capital that is necessary to be able generate the net profit in the calculation. Sometimes two companies will generate the exact same EPS number. But one of these companies could pull it with less equity or investment. Consequently, this Company would more efficient in how its Capital is utilized to generate income. And it may just be a better Company to invest in.

Also, investors need to realize that Earnings can be manipulated and exaggerated by tricky accounting. This would distort the actual EPS and make a Company look better than it really is.

So be careful and patient when participating in stock investments and stock picking !!

Robert Marsh owns a Site where he provides the top stocks to choose from and stock tips for the beginning investor as well as the experienced one!
Also visit his other money site where he shows you how make free money with the best money making ideas on the Net!

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