Stock Investing Research
With the recent boom of online trading, anyone can start stock investing from the luxury of their own home. It is important, however, to thoroughly research and understand a stock before purchasing it.
Five important elements to keep in mind when considering purchasing a stock:
- History: How much has the stock sold for in the past?
- Comparison: How does the stock stack up against others in the industry?
- Fundamentals: Is the company’s business financially sound and growing?
- Price Target: How much will investors invest in the future?
- Catalysts: What problems could change investors’ views of the stock in the future?
Do research online. Read news article and find knowledgeable websites. Check out your favorite financial website (Google, Yahoo, Msn). Look at the stock tables and other relevant information to keep you up to date on the latest trends in any given company.
You can go to the SEC’s (U.S. Securities and Exchange Commission) website and find the company’s latest 10-K. This is an annual report all public companies are required to file with the SEC. It has detailed information on the company’s overall health.
To thoroughly research a stock, you should also take into consideration the company’s business plan, recent news concerning the company, its competition, and the statistics the make up the stock’s fundamentals. You can use these statistical patterns and other measures to predict a stock’s potential growth.
Get a free copy of the company’s corporate financial statements that are filed with the Securities and Exchange Commission. Analyze these quarterly statements for a two or three year time span. Take note of the trends in its earnings per share and revenue. Watch for consistent growth in the earnings per share.
Get an accurate measure of the stock’s value by calculating the price-earnings (PE) ratio. This is done by dividing the stock price by the annual earnings per share. Look at the industry norms and the S & P 500’s ratio and compare the PE ratio with these. A high PE ratio means the market is optimistic about the future growth of the company. It shows how much a company is earning each year per share. The average PE ratio is around 13 or 14. Below that average is considered low and above is considered high. Also compare the PE ratio with the company’s competitors. If it is significantly higher or lower, this is something to take note of.
Be on the lookout for the company’s debt and cash flow. Low debt and a positive cash flow is a good sign for a company. Learn also about the company’s debt/equity ratio. If it is greater than 1.00 it means it is a riskier stock.
Avoid impulse buying. It is risky. With online stock trading, the temptation is even greater since it is so easy to do.
Researching before stock investing is a fundamental step to successful online trading.
REFERENCES:
U.S. Securities and Exchange Commision (SEC)
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Quotes
Online trading is becoming more and more attractive for stock investing.
The advantage of online trading is that the investor does not need to talk on the phone with his remisier.
Online stock trading is giving small investors the inexpensive access to financial markets that only big institutions formerly enjoyed for stock investing or online trading.
Fortunately, one of the main benefits of online trading is the fact that no buy or sell order is too small for stock investing.
Online trading is high-tech and fast, but intuitive and uncomplicated for stock investing.
At last, everything you need to know to make money in the competitive world of online stock trading is revealed.
Don't attempt online trading or stock investing without a computer.
Trading a great listed company either by daytrading or online trading is todays way of stock investing on the fast track with the smart money.
The online stock trading is very secure and safe.
Stock investing can take time, but profitable online trading takes patience.
Online stock trading is a difficult game.
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