Upward Trending Price

• Good stocks are always rising in value over time. If you look at the long-term price chart of a good stock, there will be some peaks and valleys, indicating when the price might have rallied from time to time or fallen at various points due to market corrections and investors taking profits. But overall, the price trend of a good stock should be in a long-term upward pattern.
  
  

History of Rising Dividends

• Good stocks have a history of paying a regular quarterly dividend to its investors that has increased over time. The dividend represents a portion of the company's profits being distributed to shareholders. If a company is producing strong revenues over time, that should be reflected in a dividend that is steadily increasing. Companies having financial trouble often suspend their dividends.
  
  

Strong Earnings

• Good stocks report strong quarterly earnings per share. Earnings are a way of gauging the health of a company. To calculate how much a company is earning per share, divide the income on its earnings statement by the total number of its shares outstanding. A company's earnings report is often a key indicator of whether it will be able to pay a dividend to its shareholders.
  
  

Good Debt Ratio

• Good companies often carry debt on their balance sheets for whatever reasons and that is fine as long as the debt is manageable and the company has good cash flow to handle its operations. Think twice about investing in companies that are swimming in debt and will have to spend a significant amount of its revenues serving debt payments.
  
  

Price-to-Earnings Ratio

• A company's price-to-earnings ratio (also called its P/E ratio) is a measure of the price investors are willing to pay for a company's earnings. A low P/E ratio is a good sign. It suggests that a company is well run and efficient. A high P/E is a sign that a company is not making much money per share. For instance, if the stock is trading at $25 a share with earnings per share of $5, the P/E value would be 5 ($25/$5). If a company is earning $8 per share and the P/E is 5, it tells the investor that stock should be worth $40 per share ($40/$8). In other words, if the P/E is 5, investors are paying $5 for every dollar of that company's earnings.