Using SWOT Analysis for Picking the Best Investment


When you are investing, you try to find the best companies to invest in. Aside from technical analysis and fundamental analysis, you may also have to use other approaches to the market. You may try to do some extensive SWOT analysis.

Man breaking down SWOT analysis

Doing SWOT analysis isn’t as easy as it sounds. We all know it stands for Strength, Weakness, Opportunities, and Threats. And we understand those words by themselves.

But how do we exactly do SWOT analysis for an investment? Let’s dig deep into each of the elements of SWOT analysis.


The strengths of a company are generally the first things that would catch your attention when you’re searching for a nice company to invest in.

A company can be considered strong if its balance sheet shows good figures. Or if its stock’s price movements continue a clear, attention-grabbing uptrend, it can also be deemed strong.

But the thing you want to specifically look for is the company’s strengths at:

·         Management
·         Products or services
·         Margins
·         Customers

The company should have a strong management, including its people, the employees, etc. Its products and services should also have superior quality. Then look at the margins of the company. Its financial statements are very important to look at. Lastly, the company should also have a strong, loyal customer base.

If the company meets all those criteria, you can consider it strong. But don’t forget to compare it against the remaining elements.


Sometimes, looking for a good company’s weakness is very difficult, especially if the company is very well-known. This is because it’s expected for companies to work hard and show only the company’s strengths.

Knowing the company’s weaknesses can give you hints to the potential downfalls or shortcomings of the company.

The best place to look for weaknesses is the company’s annual report. You should also watch out for the notes to the financial statements in which the company reports their potential liabilities. It would also tell you about potential competition.

Depending on the niche and market, a company’s weakness may be different from others, even if the companies basically have the same businesses.


This is also another element that is difficult to look for. This basically refers to the opportunities that the company has for growth, consequently increasing the profits that shareholders will get.

There are times that companies can benefit from huge economic moves, which are very easy to spot. However, it’s typically more difficult to spot growth opportunities for many companies.

You may want to search for new markets or new products that a company may or plans to develop. Try to look for external growth opportunities like acquisitions and mergers. Also, be on the lookout for huge, innovative social trends that the company can capitalize on.


You should never forget to look for potential threats to your investments. These things are more than just weaknesses. The threats are called threats for a reason. Threats, when realized, can cause huge impacts.

Among the most common threats that you should keep an eye on are litigation, government legislation, and competition.

The notes on the financial statement on the company can be of great help if searching for the threats that a company may have to face. Threats can hugely affect a company’s profitability, meaning it could also greatly diminish the profits you can get.


SWOT analysis can be of great help when trying to pick investments. Fused with both fundamental and technical analysis, it can prove to be your best guide in choosing the your best money-making investments.

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