The graphene industry is full of buzz. There are new graphene developments every month. Whether it is new findings from an Ivy League research lab or a graphene company issuing its initial public offering. It is all very exciting. But it is also all very confusing. So how do you know which graphene stocks you should buy? Here are some tips for investing in graphene:
- Has the company found its niche?
It is important to find a graphene company that has decided what direction it wants to go. Does the company have focus? It can be difficult for a company to “be everything to everyone.” Generally good companies develop a strategy which is clear on what product, niche, geography, and value proposition they plan to focus on. Is the graphene company you are interested planning mass graphene production, mobile phone applications or patent licensing? Whatever the graphene company wants to do, the important thing is that it is clear. Find a company that knows what it wants to do, how it wants to do it, and who they want to sell to. Try taking a look atthe graphene company’s mission and vision statements.
- Balance between industry announcements and actual corporate developments
Before you buy stocks in a graphene company, it is probably a good idea to understand what the company itself has accomplished as opposed to how well the company rides the coattails of graphene industry hype. That is not to say there is anything wrong with a graphene company publicizing general graphene industry successes. What is important is that you also discover what the company has accomplished on its own. Does the graphene organization have patents? Strategic joint ventures? Distribution rights? General graphene breakthroughs in the industry are a good thing, however ensure the graphene company you want to buy shares in has a clear method of leveraging those developments on its own.
- Read the graphene company’s annual reports and management discussion and analysis (MD&A)
Read the company’s financial statements, general reports, and MD&A reports. This may seem obvious to some, but the truth is many shy away from the seemingly foreign language of accounting and financials. The annual financial statements of public corporations are reviewed by external auditors. This means that the financial health that the graphene company broadcasts to investors (e.g. revenue, expenses, debts, assets, expenses and even pending lawsuits) are reviewed by an external unbiased party. How does the company’s key financial ratios compare to other graphene companies? How much does the company spend on R&D? Does the graphene company have any patents on the balance sheet? Has there been any acquisition activities? Does the graphene company look like a target for an acquisition?
The MD&A report is a highly valuable resource for shareholders and aspiring investors. You can think of these reports as an inside look into the minds of the top executives of the company. The great news is that if you still don’t feel fond of analyzing financial statements, the MD&A essentially explains the company’s operating results for the year. And perhaps even more useful is what the MD&A might say about the future plans of the company. What do the executives think will happen in the graphene industry? How will these developments impact the corporation? How does management plan to operate competitively.
This is definitely not a comprehensive list, however it does provide some useful tools you can use to better invest in graphene and decide which graphene stocks you should buy.
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