By
eHow Personal Finance Editor
Difficulty: Moderately Challenging
Step1
Search for stocks that have a low price to earnings ratio and strong growth potential. Keep an eye on the news for companies to investigate further.
Step2
Analyze the company. Pay special attention to return on equity, return on capital and profit margins. To determine the present value of the company, calculate its discounted cash flow.
Step3
Look at qualitative features of the company. Study the company's products and the quality of the management team. Buffet invested in Coca-Cola because of the strength of its brand.
Step4
Buy the stock. Most stocks can be purchased by opening an account with a discount brokerage.
Step5
Hold the stock for as long as the company remains financially healthy. Continually analyze the company and assess your position accordingly.