Cherry Picking The Diamonds From The Stock Market

how does the roi relate to buying stocks?

can you use just the roi to pick stocks?

No- ROI stands for return on investment- that is the proportional growth of the money you invest in a company expressed as a percent of the original investment. Ex. if you invest 500 dollars and your investment becomes worth 750, then you have a %50 ROI- the 250 gain is %50 of 500 dollars. You can't use this to pick stocks, just judge how well your pick was afterwards.

Use ROE and ROA for company metrics- ROE is Ret. on equity-the return the co has made on the stockholders investments- look for companies above %18 ROE , and ROA is return on asset- how much the co is returning on its property- Plant/materials/equipment etc. Look for ROA above 15- varies by sector though.