How to Research 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.
Tip One: All companies are required to file financial statements with the Security and Exchange Commission (SEC). You can find all publically held companies documents filed with the SEC at www.freeedgar.com. Carefully review and pay attention to all quarterly statements from two to three years back. Check all revenue and earnings per share trends during that time. Make sure there is positive increase in earnings per share.
Second tip: Now its time to calculate the company's price-earning ratio (PE). The price earnings ratio is a way to gauge the value of the stocks value. PE is calculated by dividing stock price by annual earnings per share. To make that calculation go to: http://www.webcalc.net/calc/business/1038.php.
A high company PE is sometimes viewed as an overpriced stock but can also be viewed as a stock with a lot of upside potential that has been bid up. Adversely, if a company has a low PE it could be looked at as a "vote of no confidence" or could also be an indicator it is a sleeper stock and been overlooked by the market. It would also be important to study and compare your potential stock with industry norms and the S&P 500 ratio. http://stocks.about.com/od/evaluatingstocks/a/pe.htm.
Third tip: During the process of analyzing a company's balance sheet and beware of its debt, debt structure and its plans for any long-term debt. Also look at the company's cash flow. It's always a positive sign to see 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. - 23218
Tip One: All companies are required to file financial statements with the Security and Exchange Commission (SEC). You can find all publically held companies documents filed with the SEC at www.freeedgar.com. Carefully review and pay attention to all quarterly statements from two to three years back. Check all revenue and earnings per share trends during that time. Make sure there is positive increase in earnings per share.
Second tip: Now its time to calculate the company's price-earning ratio (PE). The price earnings ratio is a way to gauge the value of the stocks value. PE is calculated by dividing stock price by annual earnings per share. To make that calculation go to: http://www.webcalc.net/calc/business/1038.php.
A high company PE is sometimes viewed as an overpriced stock but can also be viewed as a stock with a lot of upside potential that has been bid up. Adversely, if a company has a low PE it could be looked at as a "vote of no confidence" or could also be an indicator it is a sleeper stock and been overlooked by the market. It would also be important to study and compare your potential stock with industry norms and the S&P 500 ratio. http://stocks.about.com/od/evaluatingstocks/a/pe.htm.
Third tip: During the process of analyzing a company's balance sheet and beware of its debt, debt structure and its plans for any long-term debt. Also look at the company's cash flow. It's always a positive sign to see 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. - 23218
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.

