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. 

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