Researching Stocks
When deciding which stocks to pick there are certain things to be considered. Before beginning any research, decide whether or not you would like to employ a long or short-term strategy or a combination of both. Many financial planners would advise their clients to make some long-term stock investments and depending on how much someone likes studying, researching, and looking for good opportunities do some day trading. Included in this article are some very simple and basic yet proven tips for researching stocks.
First tip: Go to www.freeedgar.com and get a hold of the proper financial statements filed with the Security and Exchange commission (SEC). Analyze all proper documentation and quarterly statements at least to two or three years back. Pay attention to all indications of certain trends with earnings per share or revenue. Be sure there is consistent growth in earnings per share.
Tip two: Proper research includes knowing a company's price-earnings ratio (PE). Calculating a company's PE is a great way to quickly measure the value of a stock. To calculate a company's PE divide the stock price by the annual earnings per share. A good site to help with that calculation is: http://www.webcalc.net/calc/business/1038.php.
When a company has a high PE it is often perceived to be overpriced but it may have been bid up due to its upside potential. On the contrary, when a company has a low PE it could be potentially perceived as a "vote of no confidence" or is an indicator that particular stock has flown under the radar and its value has not been recognized. Always compare any stock you're interested in and it's PE to industry standards as well as the S&P 500 ratio. http://stocks.about.com/od/evaluatingstocks/a/pe.htm.
Tip three: In analyzing balance sheets pay attention to any debt a company may have. Also look at the company's plans for its long-term debt. Make sure to analyze the company's cash flow and make sure it's positive cash flow.
To sum it up here are some simple, basic tips that are important to know before pulling the trigger on any type of stock investment whether large or small. If you plan to invest a large sum take a look at a few more details in the company's financial statement before making that investment. Regardless of whether or not you're planning for long or short-term stock investing, hold onto your money until you've done your research. - 23211
First tip: Go to www.freeedgar.com and get a hold of the proper financial statements filed with the Security and Exchange commission (SEC). Analyze all proper documentation and quarterly statements at least to two or three years back. Pay attention to all indications of certain trends with earnings per share or revenue. Be sure there is consistent growth in earnings per share.
Tip two: Proper research includes knowing a company's price-earnings ratio (PE). Calculating a company's PE is a great way to quickly measure the value of a stock. To calculate a company's PE divide the stock price by the annual earnings per share. A good site to help with that calculation is: http://www.webcalc.net/calc/business/1038.php.
When a company has a high PE it is often perceived to be overpriced but it may have been bid up due to its upside potential. On the contrary, when a company has a low PE it could be potentially perceived as a "vote of no confidence" or is an indicator that particular stock has flown under the radar and its value has not been recognized. Always compare any stock you're interested in and it's PE to industry standards as well as the S&P 500 ratio. http://stocks.about.com/od/evaluatingstocks/a/pe.htm.
Tip three: In analyzing balance sheets pay attention to any debt a company may have. Also look at the company's plans for its long-term debt. Make sure to analyze the company's cash flow and make sure it's positive cash flow.
To sum it up here are some simple, basic tips that are important to know before pulling the trigger on any type of stock investment whether large or small. If you plan to invest a large sum take a look at a few more details in the company's financial statement before making that investment. Regardless of whether or not you're planning for long or short-term stock investing, hold onto your money until you've done your research. - 23211
About the Author:
Black Sand trading is an online stock trading tool that indicates to online traders where and how to invest their money. Black Sand's clients have consistently achieved a 53% or greater ROI over the past seven years following Black Sand's signal. For more information about trading and using Black Sand Trading visit our website.
posted by X - Men @ 1:55 AM
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