Stock Analysis Checklist: Important points to check when researching a stock
What Where Why Action
One-year Price chart Yahoo! Finance Buying a stock while it’s in O.K. to buy if stock
with 50-day moving (finance.yahoo.com > ticker a downtrend is dangerous, as price is above its 50-
average symbol > chart) it will likely move lower. A day moving average.
Click on Technical Analysis stock is in a downtrend if its
in the Charts section. Select price is below its MA, and in
50-day moving average. an uptrend if above. Use the
sample 50-day MA.
Price/Sales ratio (P/S) Reuters Snapshot Valuation check. A stock O.K. to buy if P/S is
Valuation Ratios with a P/S above 10 is less than 10, and
(www.investor.reuters.com > momentum priced. below 5.0 is best.
ticker symbol > Snapshot) Buying momentum priced
sample stocks is only recommended
in a strong market, such as
1998-1999.
Cash Flow per share Reuters Snapshot Companies with positive O.K. to buy if Cash
Per Share Data operating cash flow are safer Flow per share is a
investments than cash positive number.
burners (negative cash
flow).
Average Daily Volume Reuters Snapshot Institutional buying is an O.K. to buy if
(shares) Price & Volume important catalyst for stock Average Daily
price growth. Volume is 100,000
Institutions buy hundreds of shares or higher (0.1
thousands of shares and mil), and above one
prefer stocks with large daily million shares is best.
trading volumes so they can
easily move in and out of
positions.
Financial Health Morningstar Snapshot Invest, don’t gamble! Stick O.K. to buy if
Grade (www.morningstar.com > with companies with solid Financial Health
ticker symbol > Snapshot) financials. Grade = “A”
Morningstar Stock Grades
sample
Growth Grade Morningstar Snapshot Consistent strong sales growth O.K. to buy if
Morningstar Stock Grades over extended periods Growth Grade = “A”
translates to long-term stock or “B”
price appreciation.
Institutional Reuters Lack of institutional O.K. to buy if
Ownership (www.investor.reuters.com > ownership means mutual institutions own at
ticker symbol > funds, pension plans and other least 30% of shares
Institutional Holders) institutional buyers don’t think outstanding.
sample they will make money owning
the stock. Why would you
want to own it?
Source: http://www.winninginvesting.com/stock_analysis_checklist.htm
Stock Analysis Checklist: Important points to check when researching a stock
Number of Yahoo! Finance A company’s performance can O.K. to buy if a
Analysts Making (finance.yahoo.com > go unrewarded if nobody total of at least
Buy/Hold/Sell ticker symbol > Analyst knows about it. four analysts are
Recommendations Opinion) Sufficient analyst coverage is listed as currently
sample necessary to create investor making strong
interest, especially from buy, buy, hold,
institutions. underperform, or
sell
recommendations.
Look only at the
total number of
analysts making
recommendations,
not whether there
are more buys
than holds, etc.
Gross Margin Hoover’s Online Changes in gross margin Look at the trend
Trend Financials percentages from quarter to in Gross Profit
(www.hoovers.com > quarter point to changes in a Margin
ticker symbol > Financials company’s competitive percentages over
> Quarterly Financials) position in its marketplace. the five quarters
sample Increasing gross margins listed.
indicate an improving O.K. to buy if the
competitive position, and trend is flat or
declining margins warn of increasing. Ignore
increasing competition. variations of less
than 1%, e.g. from
61% to 60.5%.
Source: http://www.winninginvesting.com/stock_analysis_checklist.htm