Top qualitative factors to look at before investing in stocks

While there are valuation models to use before investing in stocks, there still are qualitative factors that you need to consider which may not reflect in your financial projections

Normally, investing in stocks is based on valuation models. The approach is to project the cash flows of the stock for the next five years and then discount it back to the current value based on a hurdle rate. This is later ratified with practical factors like the Price to Earning (P/E) ratio, the Price to Book Value (P/BV) ratio, sectoral benchmarks etc. Even after these efforts, what you get is a financial valuation of the stock. There are still qualitative factors that you need to consider and that may not reflect in your financial projections and your valuation models.