Various experts have projected that the economy will continue with its slow recovery throughout 2012. As such, investors are searching for relatively safe places to channel their cash. And, with the increased uncertainty of other avenues of investment, the stock market remain the investment of choice for people who want to realize good returns on their investment. Here are some tips on how to find the best stocks to buy in 2012:

Foremost, you need to look at the growth potential of the company. Is the company pursuing other growth opportunities? Is it contemplating penetrating newer markets? These are some questions you should seek to answer when looking at the growth potential of the company. After you’ve ascertained that its growth potential is positive, then you can consider it a potential stock to buy in 2012, and maybe hold for sometime.

Next, you should look at the Earnings per Share (EPS) of the stock. EPS refers to the amount of profit the company is making per every share of stock. When a company has a positive EPS, it implies that it’s making profit, and when it has a negative EPS, it implies that it’s making losses. The most essential thing to look at is if the figure is increasing or not. In most cases, earnings charts have a projection for the future, which are likely to be true. Thus, the best stocks to buy in 2012 are those with a positive EPS.

Another factor you should consider when looking for the best stocks to buy in 2012 is dividend payouts. If a company has a history of increasing or stable dividend, then it implies that it has a strong cash flow and a promising outlook for realizing even more growth in the future. On the other hand, if a company has a decreasing dividend, then it implies that it’s trying to reduce its expenses, probably an indication of difficult times ahead. A good sign of a stock to purchase is high dividend yield, since it indicates that the company is enjoying good financial health.

To conclude, when looking at a stock to buy in 2012, you should also gauge the future of that industry. If you do a thorough research of the industry, you will be able to project the direction certain stocks are taking. Thus, this will assist you in knowing the companies worthy of investing in for 2012.