Whether you’re new to stocks and trading, or a seasoned professional looking to get the edge, it pays to do your homework. It’s all too easy to get bogged down in the technical specs of stocks without taking the time to evaluate the other features that can contribute to their overall worth in your portfolio. If you’ve got some spare change to throw into a new stock, be it a commodity or something else, the following information might be of interest.
Find the Best Sites for Research
It’s not always straightforward finding an all-inclusive website to carry out stock research. They are not all created equal, leading to misinformation and bias when you merely need the hard facts. InvestmentZen’s list of the best stock research sites is a favorable option for many people. In it, those looking to invest in new stocks can search based on their desire for low-cost index funds, the next big thing, passive investments, or something else.
What you typically look for in stocks can dictate the type of research site you explore. Often, people are attracted to sites that allow you to select the metrics that matter the most to you, rather than viewing all the information on a single page that may not be relevant.
Check Out the Financials
Once you’ve found a research site that offers an overview of trading platforms, you can start delving into each company’s financials. Known as quantitative research, it involves reading through any information the company had to file with the US Securities and Exchange Commission.
Two of the most common documents are Form 10-K and Form 10-Q. Form 10-K is an independently audited annual report with information about income sources, cash handling, expenses, and revenue. Form 10-Q outlines the company’s financial results and operations for each quarter. Some sites also offer company information highlights if you don’t feel like reading through pages and pages of information.
Pick Out the Most Important Information
Whether you’re looking at penny stocks or another type, some information about a company will be more important to know than others. Get into the habit of scanning through the data that will prove most useful. The revenue is always an excellent place to start. This refers to how much money a company earned and can be broken into operating income and non-operating revenue. The latter often occurs when the business sells an asset.
The net income can be quite significant, referring to the total amount a company made after deducting tax, depreciation, and operating expenses. Those interested in adding new stocks to their portfolio may also choose to look at the price-earning ratio over the company’s past year, alongside the return on equity and return on assets.
Get Into the Details
If everything checks out financially, there are a few things to ask yourself before buying into a company with your saved income or spare cash. How does it make money? Does it have an advantage over its competitors? What about its management team, or could anything go wrong? If you identify any red flags, research them thoroughly.
There is a lot involved in researching stocks, but it doesn’t have to be complicated. Break it down into bite-sized pieces to gain an accurate insight into your chosen company’s potential. A small amount of research can offer significant peace of mind.