A GUIDE on HOW I RESEARCH, ANALYZE & perform DUE DILIGENCE on a Stock or Company (15 metrics to consider looking at)

What’s up Medium. A lot of investors having been asking questions on what to look at when considering a stock, and where to find the information, so I put this guide together on the things I look at. I’m just a regular guy who’s been investing for more than a decade (with a lot of mistakes in my first 10 years), with a degree in finance/ accounting, and working in the finance field. I hope this helps.

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(I do want to take a quick moment to mention, that ETFs are the safer route (than “stock picking”) due to diversification. Half of my money is in ETF’s, and the other half are in stocks, because I like to gamble, because it’s fun to pick stocks, and because I like to beat the market. But, any newer investors should consider ETFs before “picking stocks”. Some some ETF’s I own are: $MGC for MegaCap, $IVV for S&P 500, $QQQ for NASDAQ, $VGT for Tech, $VOT for MidCap, $VBK for SmallCap, $ARK for Innovation. With that being said, anyone who wants to do some “educated”/ “researched” gambling, keep reading.

These points below are basically the things I cover when I look at a stock, and the sources where I get them from. If I am investing large amounts of cash, I want to research thoroughly, so if the stock drops I can stick to my convictions, and forget about emotion. This helps me sleep at night. At the end of the day, this is your money, and noone cares more about it than you do. (This list is in no particular order. Below is just my preference. Everyone’s “recipe” is different. Find what works for you!

• Know the company. I also use google to find out as much as a company as possible. What do they do? How do they make money? Why are they important? What are their products?

1. Positives? Strengths? Moat? Advantages? Opportunities? Growth? Catalysts?
2. Downside? Negatives? Concerns? Weaknesses? Threats? Risks?

• Growth. I look into the financials to look at past growth. I look into news, 10Q’s, 10Ks, investor presentations, and statements to look for future growth. I find out out new products, or a changing landscape. How will the company scale?
• Financial health. Are the financials strong? Is the company financially healthy? Are cash flows from operations positive? How are Investing & Financing Cashflows? Is net income growing? Are profit margins Getting better? Is the Quick ratio over 2 to sustain operations? Is EPS growing? Income Statement Trend, etc.

1. ChartMill.com: https://www.chartmill.com/stock/quote/AAPL/fundamental-analysis

• Earnings & revenue history. Is there growth? Is there potential? I look at the financials and the projections. Have they missed earnings? Have they beat earnings? Has earnings remained flat or grew consistently?

1. GuruFocus.com: https://www.gurufocus.com/financials/AAPL
2. BarChart.com: https://www.barchart.com/stocks/quotes/AAPL/income-statement/annual
3. Chartmill.com: https://www.chartmill.com/stock/quote/AAPL/financials/income-statement

• Valuations. How is this valuated? (PEG ratio, P/E ratio). Is it undervalued? How does the valuations compare to peers or competitors in the industry?

1. Validea: https://www.validea.com/guru-analysis/aapl
2. GuruFocus: https://www.gurufocus.com/stock/AAPL/dcf

• Price upside/ targets & Analysts rating consensus. I am curious about what the analysts covering a stock think it’s worth. I look to see what the analysts covering it, have to say about the price targets.

1. TipRanks: https://www.tipranks.com/stocks/aapl/forecast
2. ChartMill: https://www.chartmill.com/stock/quote/AAPL/analyst-ratings

• Charts Analysis and the technical indicators. I am curious about what the charts have to say about momentum, and what prior prices and charting have to say about price prediction. I try to read and interpret the charts to see what previous trading patterns can predict. What are the short-term, mid-term and long-term predictions? I look at RSI, moving averages, MACD, Stochastic Oscillator, etc.

1. BarChart.com: https://www.barchart.com/stocks/quotes/AAPL/opinion
2. ChartMill.com: https://www.chartmill.com/stock/quote/AAPL/technical-analysis

• CEO, Management Team and Leadership: I check Glassdoor and Indeed to learn about the management of the company, and google their CEO. A CEO with low/ bad ratings is a bad sign
• Short selling. How much of this stock is sold short? Are people betting against it? If so, why are they?
• What is the put/call ratio? Are people betting against this stock? Then is so, research why. This might be reasons to be weary.

1. BarChart.com: https://www.barchart.com/stocks/quotes/AAPL/put-call-ratios

• Peers & competition, and competitive landscape. How does this company stack up against its competitors and peers? How do the financials compare? How to the products compare? Is there a moat?
• Institutional Sponsorship. Are big banks and wall street holding this? How much or this company’s stock do they hold?

1. GuruFocus.com: https://www.gurufocus.com/stock/AAPL/ownership
2. TipRanks: https://www.tipranks.com/stocks/aapl/hedge-funds

• Insider Trading. Is the CEO buying or selling shares? Is management buying or selling shares?

1. ChartMill.com: https://www.chartmill.com/stock/quote/AAPL/ownership

• How many ETFs that hold this stock? Will they continue to buy it up and drive price?

1. ETFDB: https://etfdb.com/stock/AAPL/

• Recent News. I Google the company and look at recent articles. What are people saying? What are bloggers saying? What is the news saying? Any new news? Bad news? Good News? Reasons for movement in recent stock price?

1. TipRanks.com: https://www.tipranks.com/stocks/aapl/stock-analysis
2. BarChart.com: https://www.barchart.com/stocks/quotes/AAPL/sec-filings

• Social sentiment. I check what people are saying on twitter and google search trends.
• Average volume traded. Is this stock liquid? Would I be able to get my money back? How easy can I trade it. How large/small are the bid/ask spreads?

There are many sites you can use to dig into a stock such for the information mentioned above. My favorites are:

1. Validea
2. TipRanks
3. GuruFocus
4. ChartMill
5. BarChart

Also, I use an excel spreadsheet to organize my research. Always do your research, At the end of the day, this is your money, and no one cares more about it than you do.

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