Don't invest in these stock's/ negative characterize

                        High debt level

These companies are clearly in a less enviable position than companies with low debt. For high debt companies,  there is always the requirement of paying back their creditors, which influences their business decision. Firms with high debt have less financial flexibility, they have less and have to pay more for access to the capital markets.

A company with a debt equity ratio above 50 should have a good business reason to justify having that level of leverage. A companies ability to pay back, it's debt can also be seen in the company's credit or debt rating.

                         Cash level or cash flow

CA's is the life blood of a business. Companies that have low level of cash and/ or unable to turn some of their assets into cash quickly will not be in business very long. Like companies with low debt, and high cash level have far greater financial flexibility. They more option when it comes to expansion, research and development, mergers and acquisitions, share buy backs, paying dividends and reducing debt.

Investor should be cautious about investing in companies that have current ratios below 1.0 and cash to asset ratio less than 2 percent.

                     Liquidity concerns

Stocks that are priced below than their fair value and do not offer good liquidity. Stocks with poor liquidity usually trade with big percentage spread between the bid and ask price. Equities with a low average volume of shares traded and this that do not have a lot of share out standing also have problems with liquidity. There are a few of these companies that will go up exponentially. But there is much greater chances of the stock depreciating and going bankrupt.  When it is priced below their face value.

                          Losing money

Investor should avoid companies that do not have earnings. Companies that continually lose money will eventually be out of business, investor can spot these companies by looking for a negative net income figure and with negative historical and forward price earning ratios. These stock will also usually have low net profit margins and low negative return on equity ratios.

                           Low sales

Sales are clearer figure than earnings, since it is harder accountants to manipulate. Sales in the top line number. It is not affected by depreciation, interest expenses, taxes etc. Investor should avoid companies have bad sales trend. Avoid companies that have been unable consistently increase sales and or not projected to do so in the future.

                        Low level of institutional or                                              management ownership.

The company's management and large institutions are groups of investors whose stock purchase and sales are widely followed by potential share holders.
Potential  investors also like seeing that institutional investors have purchased or considering purchasing stock in a company. A company's management should have the best information on the day to day operations of its business. Its not a good sign, if , they are selling large blocks of the company's stock.

                             Do not pay a dividend

Companies that pay out dividends are usually in better financial conditions than those that do not. They have enough extra cash to directly to investors, companies rises it's dividends, believes that future earnings will be able to support it. And in most cases, a company that lowers its dividend is having financial difficulty. A dividend cut is usually met in the market place with a sharp sell of in the stock.

                         Expensive valuation

The best overall valuation method is the forward PEG ratio. This ratio incorporates three of the most important components in evaluating a stock. Companies with a forward PEG ratio below 1.0 are looked at as being attractively valued, investor should be careful investing in any equity with a forward PEG ratio above 2.

A stock with a price / sales ratio above 2 is looked at as being expensive.

A stock price/ cash flow ratio is above 20 is looked at as being very highly priced. 

A price/ book ratio above 5 is viewed as expensive.

Investor should be cautious, when company involved in unrelated business, investor should be wary about companies getting away from their prime business.

Legal concerns are another factor that can have an enormous affect on share prices.