-
Step 1
Analyze the historical pricing of the stock. A stock that experiences wild swings in stock price is not a safe stock. You want to search for stocks that have a stable price history.
-
Step 2
Select a group of stocks that have a stable price history for further investigation. Once you peruse the entire market for safe stocks, you need to select a few of these stocks for in-depth examination.
-
Step 3
Investigate what each company produces or the service they provide. Safe stocks will perform functions or produce products that investors consider staples of the average consumer's lives. For instance companies that produce household products, prescription drugs, or food are for most part safe stocks. There are variations within the industry but these are products that people need to function.
-
Step 4
Examine the financial documents for each stock to determine financial fitness. Companies that are in deep debt are not a safe investment. Neither are companies that have wide fluctuations in earning from one year to the next.
-
Step 5
Narrow the list of stocks down to a few final stocks based on the previous steps.
-
Step 6
Establish price points for each stock. Price points are the price you are willing to pay for each stock.
-
Step 7
Submit a limit order to purchase the safe stock at the designated price point. An investor should always use the limit order because it allows the investor to establish a price they are willing to pay for a stock. Conversely, a market order, which is the other purchase option, allows the market to set the stock price.
