How to Research Stocks
This guide will walk readers through the steps necessary to research a stock, including understanding how fundamental analysis and technical analysis work, analyzing financial metrics, gathering information on qualitative research and news developments, and how to place everything into context.
How to Research Stocks Before Investing
It’s essential to research a stock thoroughly before you invest in it. If you invest in the wrong stocks, you’ll see your funds go down rather than up. Investment approaches often break into two schools of thought: fundamental and technical analysis.
Financial Information to Gather When Researching Stocks
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.
Focus on the Financial Metrics that Matter
- Revenue - Net Income - Earnings per Share (EPS) - Book Value per Share - Market Capitalization (Cap) - P/E Ratio - Return on Equity (ROE) - Dividends
How to Analyze a Stock with Fundamental Analysis
Fundamental analysts usually focus on long-term investments rather than intraday trading. They seek to determine a stock’s intrinsic or “fair market” value. It’s recommended to buy undervalued stocks.
How to Pick Stocks
Fundamental analysis can become very complicated, so most people rely on investment research services to find gems.
1. Motley Fool Rule Breakers
Motley Fool Rule Breakers focuses on stocks that they believe have massive growth potential in emerging industries. This service isn’t fixating on what’s currently popular, but rather always looking for the next big stock.
2. Motley Fool Stock Advisor
Stock Advisor primarily recommends well-established companies. Over a decade ago, they advised subscribers to buy companies such as Netflix and Disney, which have been majorly successful.
Swipe up TO KNOW MORE ABOUT How to Research Stocks