How to Research Stocks Before You Buy [How to Pick Stocks]
Investing in stocks can be a great way to generate income and build wealth. But it’s important to do your research before you buy anything.
How to Research Stocks Before Investing
Fundamental analysts focus on determining what they believe to be the intrinsic value of stocks. Many valuation metrics go into this analysis. This includes items like price-to-earnings ratios, price-to-sales ratios, price-to-free cash flow, return on invested capital, the net present value of discounted cash flows and much, much more.
Once fundamental investors come up with a number for the intrinsic value, they compare it to the current stock price to see if it is undervalued and should be bought or overvalued and should be sold.
Financial Information to Gather When Researching Stock
You’ll need to gather the necessary materials to conduct research on a stock before you buy. This means documents like SEC filings, the company’s most recent annual report, quarterly earnings reports, press releases, company presentations and reports and financial statements.
Financial Information to Gather When Researching Stock
SEC filings
Annual reports
Quarterly reports
Press releases
Financial Information to Gather When Researching Stock
Company presentations and reports
Financial statements
Industry research publications
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