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Stock Research: How to Do Your Due Diligence in 4 Steps

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Stock research involves investigating a company's financials, leadership team and competition to figure out if you want to invest.

When doing stock research, it's helpful to know terms such as revenue, earnings per share and price-earnings ratio.

A good stock research site can help you find lots of information quickly and may even offer stock analysis.

Stock research is a lot like shopping for a car. You can base a decision solely on technical specs, but it’s also important to consider how the ride feels on the road, the manufacturer’s reputation and whether the color of the interior will camouflage dog hair.

What is stock research?

Stock research is a method of analyzing stocks based on factors such as the company’s financials, leadership team and competition. Stock research helps investors evaluate a stock and decide whether it deserves a spot in their portfolio.

» Looking for a lesson in how to buy stocks instead? We have a full guide to that here .

4 steps to research stocks

One note before we dive in: Stocks are considered long-term investments because they carry quite a bit of risk; you need time to weather any ups and downs and benefit from long-term gains. That means investing in stocks is best for money you won't need in at least the next five years. (Elsewhere we outline better options for short-term savings .)

1. Gather your stock research materials

Start by reviewing the company's financials. This is called quantitative research, and it begins with pulling together a few documents that companies are required to file with the U.S. Securities and Exchange Commission (SEC):

Form 10-K: An annual report that includes key financial statements that have been independently audited. Here you can review a company’s balance sheet, its sources of income and how it handles its cash, and its revenues and expenses.

Form 10-Q: A quarterly update on operations and financial results.

Best stock research websites

The SEC’s Electronic Data Gathering, Analysis and Retrieval (EDGAR) website provides a searchable database of the forms named above. It’s a valuable resource for learning how to research stocks.

Short on time? You’ll find highlights from the above filings and important financial ratios on your brokerage firm ’s website or on major financial news websites. (If you don't have a brokerage account, here's how to open one .) This information will help you compare a company’s performance against other candidates for your investment dollars.

» View our picks: The best online brokers for stock trading

2. Narrow your focus

These financial reports contain a ton of numbers and it's easy to get bogged down. Zero in on the following line items to become familiar with the measurable inner workings of a company:

Revenue: This is the amount of money a company brought in during the specified period. It’s the first thing you’ll see on the income statement, which is why it’s often referred to as the “top line.” Sometimes revenue is broken down into “operating revenue” and “nonoperating revenue.” Operating revenue is most telling because it’s generated from the company’s core business. Nonoperating revenue often comes from one-time business activities, such as selling an asset.

Net income: This “bottom line” figure — so called because it’s listed at the end of the income statement — is the total amount of money a company has made after operating expenses, taxes and depreciation are subtracted from revenue. Revenue is the equivalent of your gross salary, and net income is comparable to what’s left over after you’ve paid taxes and living expenses.

Earnings and earnings per share (EPS). When you divide earnings by the number of shares available to trade, you get earnings per share. This number shows a company’s profitability on a per-share basis, which makes it easier to compare with other companies. When you see earnings per share followed by “(ttm)” that refers to the “trailing twelve months.”

Earnings is far from a perfect financial measurement because it doesn’t tell you how — or how efficiently — the company uses its capital. Some companies take those earnings and reinvest them in the business. Others pay them out to shareholders in the form of dividends.

Price-earnings ratio (P/E): Dividing a company’s current stock price by its earnings per share — usually over the last 12 months — gives you a company’s trailing P/E ratio . Dividing the stock price by forecasted earnings from Wall Street analysts gives you the forward P/E. This measure of a stock’s value tells you how much investors are willing to pay to receive $1 of the company’s current earnings.

Keep in mind that the P/E ratio is derived from the potentially flawed earnings per share calculation, and analyst estimates are notoriously focused on the short term. Therefore it’s not a reliable stand-alone metric.

Return on equity (ROE) and return on assets (ROA): Return on equity reveals, in percentage terms, how much profit a company generates with each dollar shareholders have invested. The equity is shareholder equity. Return on assets shows what percentage of its profits the company generates with each dollar of its assets. Each is derived from dividing a company’s annual net income by one of those measures. These percentages also tell you something about how efficient the company is at generating profits.

Here again, beware of the gotchas. A company can artificially boost return on equity by buying back shares to reduce the shareholder equity denominator. Similarly, taking on more debt — say, loans to increase inventory or finance property — increases the amount in assets used to calculate return on assets.

» Want to make sense of stock charts? Learn how to read stock charts and interpret data

3. Turn to qualitative stock research

If quantitative stock research reveals the black-and-white financials of a company’s story, qualitative stock research provides the technicolor details that give you a truer picture of its operations and prospects.

Warren Buffett famously said: “Buy into a company because you want to own it, not because you want the stock to go up.” That’s because when you buy stocks, you purchase a personal stake in a business.

Here are some questions to help you screen your potential business partners:

How does the company make money? Sometimes it’s obvious, such as a clothing retailer whose main business is selling clothes. Sometimes it’s not, such as a fast-food company that derives most of its revenue from selling franchises or an electronics firm that relies on providing consumer financing for growth. A good rule of thumb that’s served Buffett well: Invest in common-sense companies that you truly understand.

Does this company have a competitive advantage? Look for something about the business that makes it difficult to imitate, equal or eclipse. This could be its brand, business model, ability to innovate, research capabilities, patent ownership, operational excellence or superior distribution capabilities, to name a few. The harder it is for competitors to breach the company’s moat, the stronger the competitive advantage.

How good is the management team? A company is only as good as its leaders’ ability to plot a course and steer the enterprise. You can find out a lot about management by reading their words in the transcripts of company conference calls and annual reports. Also research the company’s board of directors, the people representing shareholders in the boardroom. Be wary of boards comprised mainly of company insiders. You want to see a healthy number of independent thinkers who can objectively assess management’s actions.

What could go wrong ? We’re not talking about developments that might affect the company’s stock price in the short-term, but fundamental changes that affect a business’s ability to grow over many years. Identify potential red flags using “what if” scenarios: An important patent expires; the CEO’s successor starts taking the business in a different direction; a viable competitor emerges; new technology usurps the company’s product or service.

4. Put your stock research into context

As you can see, there are endless metrics and ratios investors can use to assess a company’s general financial health and calculate the intrinsic value of its stock. But looking solely at a company's revenue or income from a single year or the management team's most recent decisions paints an incomplete picture.

Before you buy any stock, you want to build a well-informed narrative about the company and what factors make it worthy of a long-term partnership. And to do that, context is key.

For long-term context, pull back the lens of your research to look at historical data. This will give you insight into the company's resilience during tough times, reactions to challenges, and ability to improve its performance and deliver shareholder value over time.

Then look at how the company fits into the big picture by comparing the numbers and key ratios above to industry averages and other companies in the same or similar business. Many brokers offer research tools on their websites. The easiest way to make these comparisons is by using your broker's educational tools, such as a stock screener. (Learn how to use a stock screener .) There are also several free stock screeners available online.

The bottom line on how to research stocks

Stock research is just a matter of gathering the right materials from the right websites, looking at some key numbers (quantitative stock research), asking some important questions (qualitative stock research) and looking at how a company compares to its industry peers — as well as how it compares to itself in years past.

Following these four steps can help you gain a deeper understanding of how to research stocks.

Colloquially, yes — "due diligence" or "DD" is a synonym for stock research.

Some professional investors, such as financial advisors, have a duty to act in their clients' best interest and are legally required take care, or exercise "due diligence," to not harm them financially — for example, by thoroughly researching an investment before buying it on behalf of a client.

Paid subscriptions and tools may streamline the research process, and may have more obscure types of stock data that aren't easy to find for free. But all of the types of data we've discussed in this article, such as SEC filings and valuation metrics, are available for free on websites such as EDGAR and Yahoo Finance .

Some professional investors, such as

financial advisors,

have a duty to act in their clients' best interest and are legally required take care, or exercise "due diligence," to not harm them financially — for example, by thoroughly researching an investment before buying it on behalf of a client.

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5 stock research tools

Some investors prefer to let experts manage their money. Others like to take a more hands-on approach. And many employ a combination—investing most of their portfolio in professionally managed products, and setting aside a portion to make their own investments. If you like to make some, or all, of your own investing decisions, there are a number of tools that can help you do so.

Here are 5 ways you can research stocks and manage your investments using online tools—many of which you might already have at your disposal.

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1. Research platform

One of the most helpful, do-it-yourself resources for investors is a research platform. A research platform can provide you with a wealth of information, such as quotes for individual stocks, company financial statements, key company statistics, and much more. Even experienced, advanced investors and traders may be surprised to discover how extensive the tools and resources are that can be found in a particular platform.

If you go to the home page of Fidelity.com , you will find a powerful research platform within the News & Research tab at the top of the page. This is where you can get access to a lot of information on not only stocks but also sectors and industries , exchange-traded funds (ETFs) , mutual funds , bonds , options , IPOs , and annuities .

You can also enter a company/security or its ticker symbol in the search bar on the top-right corner of the page. This will bring you to a specific company’s snapshot page. Here, you can find a plethora of information that can help you research publicly traded companies or financial securities.

Suppose you were considering investing in a stock. On its snapshot page, you can find a detailed quote containing vital information such as the current stock price, average daily volume, and annual yield (see the image below). You’ll also be able to look at a chart of the stock’s price, find the latest news and research reports, and see other key statistics (more on all this information shortly).

Once you've made your investment choices, managing them is critical to being successful. You can use all the tools mentioned above to monitor and research your open positions. There are also ways to determine whether the stocks you’ve researched and chosen are a good mix when looked at as a whole.

Fidelity offers a Planning & Guidance Center , a guidance tool that compares your current portfolio with your target asset mix so you can evaluate areas that may need adjustment. This portfolio-level review can be a great way to see whether the stocks that you've researched are collectively meeting your investing objectives. You may also want to consider Fidelity's Guided Portfolio Summary SM Log In Required which can help you break down the investments in your portfolio and identify areas that may need more attention.

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risk. before trading options, please read characteristics and risks of standardized options . supporting documentation for any claims, if applicable, will be furnished upon request. past performance is no guarantee of future results. technical analysis focuses on market action — specifically, volume and price. technical analysis is only one approach to analyzing stocks. when considering which stocks to buy or sell, you should use the approach that you're most comfortable with. as with all your investments, you must make your own determination as to whether an investment in any particular security or securities is right for you based on your investment objectives, risk tolerance, and financial situation. past performance is no guarantee of future results. the equity summary score is provided for informational purposes only, does not constitute advice or guidance, and is not an endorsement or recommendation for any particular security or trading strategy. the equity summary score is 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What to look out for when researching stocks, before you start buying individual stocks, here's what to keep in mind..

Many money moves we make require doing our homework beforehand.

When saving up for a big purchase, research tells us it's important to know the difference between a traditional savings account versus a high-yield savings account . (Hint: the latter grows your money faster.)

Or, when signing up for a new travel credit card , we're naturally inclined to first shop around for the cards offering the best welcome bonus .

And when it comes to investing our money in the market, doing our research is just as crucial. You don't have to be an expert to start buying stocks, but the more you know going in, the better off your investing journey will be.

Here's what to keep in mind when researching stocks.

Start with yourself: What's your risk tolerance?

People ultimately buy stocks with one end-goal in mind: to build wealth. But it's important to note here that wealth is not guaranteed. Investing in individual stocks carries much more risk than, say, buying bonds or putting your money in index funds .

As you begin to research stocks, first know how much risk you can take on, or your risk tolerance . Are you able to comfortably stomach large financial losses? Financial experts typically recommend that you only invest money in individual stocks that you can afford to lose and, since investment returns are typically maximized over the long haul, only invest money that you won't need in the short term.

So the money you want to use for a down payment on a house in the next year or so, or for your kid's college education in the next 15, is best put in different types of accounts — think a high-yield savings and 529 account , respectively.

Look to put your money in low-cost index funds that offer automatic diversification, thus less risk. Two popular examples are the Vanguard S&P 500 ETF (VOO) and the Schwab U.S. Broad Market ETF (SCHB) .

You could also enlist a robo-advisor to do the work for you. Using your risk tolerance and time horizon, a robo-advisor platform like Betterment , Ellevest or SoFi Invest® will create a customized investment portfolio on your behalf.

Next, onto stocks: What does the company do?

Warren Buffett once said, "Never invest in a business you cannot understand."

This may seem obvious, but it's worth reminding yourself that you should understand what the company does, or the products it makes, before buying into it. After all, as an investor, owning its stock means owning a portion of that company.

Before betting your money on a software company specializing in data security and analytics, for example, make sure you understand how the cybersecurity world works.

How does the company make money?

Understanding the company's product is one thing, but understanding its finances paints a bigger picture that an investor needs to see. A company can be innovative, but does it make money that will, in turn, make you money? Take tech companies as an example. You may understand and like the product (and even use it yourself), but how do they monetize their huge platform of users?

To dive into a company's financials, look up its annual reports. Publicly-traded companies offer annual reports for free to the public so that current and future stockholders can view the company's performance and see what it has been up to.

You can usually find a company's annual report on its website, under an "investor relations" tab. Googling the company's name and "investor relations" is also a shortcut that will bring you to the right spot. On this webpage, you can also find information on the company's quarterly earnings calls, which anyone can tune into, as well as access analyst coverage of the company.

Has the company historically performed well?

A company's historical performance isn't a sole reason to buy (or not buy) its stock, but it can help lend some insight into what you can expect.

Websites Google Finance and Yahoo! Finance allow investors to research historical data, such as price charts that go back several decades. Users can also compare stocks' historical data with one another.

Note that past performance does not guarantee future success — just because a company has performed well in the past does not mean that it will continue to do so in the future.

Select reviewed over 12 online brokers that offer zero-commission trading and narrowed down the top six platforms for all sorts of investors: TD Ameritrade ; Ally Invest ; E*TRADE ; Vanguard ; Charles Schwab and Fidelity .

These six offer the widest range of investment options, user-friendly technology, quality customer support and educational resources. You can read more about our methodology on selecting the best $0 commission trading platforms below.

Bottom line

Before you jump into the complicated and risky world of stock investing, take the time to just get your feet wet by doing research beforehand.

Start by understanding your risk tolerance, and then move onto understanding what the publicly traded companies do, what products they offer, how they make money and how they've performed in the past. Experts generally suggest that individual stock picks make up only about 5% to 10% of your overall investment portfolio, with the remaining put in less risky investments.

Our methodology

To determine which $0 commission trading platform offers the best services for consumers, Select narrowed down offerings to a list of 10 initial platforms. We then analyzed and compared each one based on the following factors:

Account minimums
Account types
Account and advisory fees
Customer support
Expense ratios of available investments
Selection of investments
Trading fees
Available technology, including mobile platforms
Educational tools and resources

After reviewing the above features, we based our recommendations on platforms offering the widest range of investment options, robust educational tools and resources, user-friendly technology, as well as the lowest fees and expense ratios. We also looked into each company's customer support structure, available avenues of communication and app reviews.

Note that with all trading platforms, there are no guarantees you'll earn a certain rate of return or current investment options will always be available. To determine the best approach for your specific investment goals, speaking with a reputable fiduciary investment advisor is recommended.

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How to Research Stocks – A Step-by-Step Guide

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You must learn how to research stocks properly if you want longevity as a trader or investor. The approach might differ depending on your long-term investment goals. However, primary considerations like vital financial ratios, chart patterns, trends, and management analysis are foundational.

This guide will cover the stock market for beginners and how you can research it for informed trading decisions. You’ll also learn what to look for when buying stocks to avoid scams and losing trades. With that in mind, let’s begin with learning the stock market metrics.

Significance of Informed Decision-Making

Role of research in mitigating investment risks, long-term benefits of diligent stock research, fundamental analysis vs. technical analysis, combining both approaches for holistic insights, quantitative vs. qualitative research in stock analysis, leadership and management effectiveness, evaluating board structure and independence, examining executive compensation practices, key information to gather before investing, customizing checklists based on investment objectives, regularly updating and revising research checklists, recap of key research strategies, importance of stock research.

One brilliant thing about today’s world is its accessibility to information . You don’t need to go to the library or buy newspapers to capture information about the stock market. Your smartphone is powerful enough to bring you everything you need to know before trading.

We recommend adding alternative data services to your research tools. Of course, news platforms are also crucial to stock research.

You can rely on expert trading opinions and follow trends. Most trading platforms allow experts to post their trades for copy trading, while others include a social chat feature. Notwithstanding, you’ll miss out on developing a trading strategy that works with or without expert opinions.

We’d rather have you research a stock before trading than rely solely on AI or experts. The latter can fix you up for a quick trade. However, you must know how to value a stock to settle in for the long run.

You can get away with making mistakes in virtual trades. eToro offers a $100,000 virtual trading account that can accommodate your mistakes until you master how to research stocks. Nonetheless, real-world trading decisions will cost you real money.

Informed decision-making relies on facts, not emotions or opinions . It doesn’t matter whether you feel a stock’s value will rise or not. What matters are the facts that support your feelings or opinions.

Informed decision-making doesn’t guarantee successful trades , but you’ll dodge several sinkholes. This approach prevents you from trading on impulse.

We recommend trading with an amount you don’t mind losing . Even so, you cannot afford to lose it when research could’ve helped you avoid the wrong decisions.

The significance of informed decision-making goes beyond one trade. You’ll develop a trading pattern and strategy that’ll keep you afloat in the long run. Unnecessary losses can quickly drain your account, leaving you nothing to trade with.

Stock trading comes with risks , even for seasoned traders. The same applies to other markets like commodities, metals, cryptocurrency, forex, indices, ETFs, etc. Hence, traders try to eliminate as much risk as possible, reducing it to a bearable level.

Investing research time in the stock market mitigates investment risks . For example, you’ll see if a company has a looming scandal that can destroy its stocks. You wouldn’t mind looking elsewhere after discovering such news.

Another example is reviewing technical indicators like the MACD indicator and oscillators. These tools can help you identify swing points in a stock’s price movement. We are certain you’ll know when to enter and exit the market with such details.

You’ll easily identify large and small-cap stocks with adequate research. These have different risk levels for investments.

Research identifies risks that price chart overviews might not indicate . Like the example above, a stock might be enjoying a bull run when setting up for a sideways and bear market.

Consider research like a magnifying glass. We’ll show you how to know which stocks to buy and give you the research approach for further use.

Your decision-making will improve as you rely more on facts than on impulse . For example, a market might be in a bear run while the trading volume steadily increases. That means the sentiment is positive, and a price swing is about to occur, taking the stock upwards.

The following are the long-term benefits of diligent stock research:

Higher returns from successful trades
Improved financial literacy occurs as you grasp concepts like valuation metrics, analytical methods, technical graphs, etc.
Long-term wealth creation through investing in high-quality stocks
Improved confidence in your trades
Minimized risk
Enhanced financial well-being

You’ll have more money to invest and continue earning from the market. Research does not only cover learning how to know what stocks to buy. It also covers dividend stocks , a crucial approach to long-term income.

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Different Approaches to Stock Research

There are different approaches to learning about the stock market, with distinct advantages. Some people prefer numbers through charts and technical indicators . Others prefer qualitative information like news reports, company announcements, SEC filings, government regulations, etc.

The table below shows the difference between fundamental and technical analysis:

You can see how fundamental analysis complements technical analysis from the table above. Learning the two approaches will take time. However, you’ll be glad to know them, as they are the fundamentals of learning how to research stocks.

Being a long-term investor does not mean throwing away technical analysis. You won’t focus on short-term price movements. Instead, you will focus on the overall picture months and years of trading data revealed.

Long-term investors still use technical indicators like moving averages to smooth steep price swings. Similarly, short-term investors can benefit from assessing an asset’s quality and comparing it with market trends. Alternative data like news and economic indicators (e.g., the inflation rate) can add context to historical price data and trading volume.

A stock split might allow new investors to buy shares at a lower price, but that shouldn’t be your sole influence. We recommend combining fundamental analysis and technical analysis for holistic insights . You’ll take more time to identify trading opportunities, but the effort is worth it.

Most trading apps, especially stock market research and investment software, have tools for both analyses. Some offer virtual trading accounts to get you started toward becoming a seasoned stock market analyst.

You cannot escape these analyses unless you trade for leisure. We’ll show you how to value a stock with fundamental and technical research.

The fundamental difference between quantitative and qualitative research lies in numbers and words. Quantitative research deals with numbers and statistics. That is where you’ll find terms like standard deviation, percentiles, price-to-earnings ratios, beta in stocks , etc.

Quantitative research relies on data-driven techniques to identify market trends and trading signals. Most technical tools are built on quantitative research algorithms.

Qualitative research brings in a subjective analysis of non-quantifiable assets or data . For example, you can review employers’ appraisals to gauge a company’s work culture.

Reading the news, events, product launches, mergers, acquisitions, new regulations, etc., make up part of qualitative research. The idea is to draw an inference from the data.

Let’s see a practical example. Company A has a disruptive product on the market. However, the CEO is a former gambler with several debt cases.

The CEO’s background immediately raises red flags about the company. You’ll likely refrain from investing because the CEO’s track record is not stellar. Compare that to a CEO who has headed successful companies, and you’ll see your perception change .

Qualitative research requires a few mathematical tools . You can stay on your sofa and read about any aspect of a company as needed. A few hours will leave you with enough information to appraise the company as credible or suspicious.

Some alternative data services attempt to collate qualitative data in one spot . They can help narrow your research instead of sifting through terabytes of data on the internet.

Management and Corporate Governance Analysis

This section is qualitative, as you don’t need complex mathematical skills to evaluate it. You can gain information through the company’s governing and corporate structure. That goes beyond the management structure most companies display on their websites.

Dig deeper into the official books. For transparency, most companies allow the public to see their governance structure.

The things you can do at this stage include the following:

The best approach to assessing leadership and management effectiveness comes from individual strengths . Review the leaders’ backgrounds, from the CEOs to other management staff. You’ll discover that some CEOs have significant success stories while others are in for the first time.

Progress from individual strengths to corporate decisions . Review major decisions the company has made in the past. These include partnership deals, advertorials, mergers, product investments, etc. The more success stories you have, the more effective the company’s leaders are.

Evaluate milestones and compare them with the company’s vision . Fulfilling milestones points to the leadership’s commitment to achieving its goals. That can boost investor confidence to buy the company’s stocks.

An independent board can make better objective decisions because they do not materially connect with the company. Former directors and company executives should not be part of the board. The more independent a board is, the more likely it is to make decisions in the company’s best interest .

Review each board member and their ties to the company . That is the approach to evaluating the board’s independence.

Executive compensation should be transparent. Cunning or missing information in this regard is a red flag.

Executives should receive good compensation. However, their compensation shouldn’t come at the expense of the company.

Building a Research Checklist

Here are a few details you should gather before investing:

Your investment goals
Your risk tolerance
The company’s financial statements
Market capitalization
Price-to-earnings ratios
Financial ratios
Leadership and management structure
Major news and events

The list in the previous section is unfixed. We recommend customizing it based on your investment objectives. For example, dividend yields will come if you want to be a long-term investor.

Determine if you are investing for the short- or long-term. Then, determine how much you want to invest.

Revisit your checklists and add new details as the market changes. For example, you might add the analysis from reputable platforms to your checklists. The key is recognizing a crucial detail and updating your checklists.

Remember to use the following research strategies:

Begin with fundamental analysis
Analyze qualitative data, including financial statements, ratios, and leadership/management structure
Identify the stocks and view their price charts
Add indicators and oscillators to identify trends
Review news and other events affecting the company

Learning how to research stocks properly will spare you the pitfalls of impulse trading. You’ll make better-informed decisions after reviewing multiple company and trading data sets . Also, combine fundamental and technical analysis for holistic insights.

Practice with the eToro virtual trading account.

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How do you research a stock before you buy it?

Research involves finding as much information as possible about the company and the stock price movement.

How do I research my own stocks?

Begin by reviewing the company’s financial statements and ratios. Then, use technical analysis platforms to analyze the stock’s price movements and identify trends. You can add news and events to gauge market sentiment.

What are the best stocks for beginners?

We can’t recommend specific stocks, as things may change when you read this article. Instead, we recommend blue-chip companies because of their stability and steady growth.

What stock pays the highest dividend?

Texas Instruments Inc., Lockheed Martin Corporation, and Air Products Chemicals, Inc. pay the highest dividends. This might change in the coming months.

What’s the safest stock to invest in?

The safest stocks have the lowest volatility. Find stocks in low-volatile industries.

https://www.investopedia.com/terms/s/sec.asp
https://rpc.cfainstitute.org/en/policy/positions/board-independence
https://edition.cnn.com/markets/fear-and-greed
https://www.nasdaq.com/market-activity
https://finance.yahoo.com/news/7-stocks-rattled-corporate-scandals-154313784.html

Jeremiah Awogboro

Jeremiah Awogboro is an experienced content writer with over 8 years of experience. He has a qualified MBChB degree and a keen interest in the stock market and the finance industry. His background in the industry has provided him with valuable experience in this field. Awogboro is dedicated to assisting and reaching out to as many people as possible through his writing. In his spare time, he enjoys music, football, traveling, and reading.

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How to Research Stocks

Investing in Stocks
Investing Courses

Investing in the stock market has provided generations of people with a more attractive alternative to keeping extra funds in a savings account, buying certificates of deposit (CDs) or earning interest from holding fixed-income securities.

Stock market returns have historically increased over time considerably beyond the rate of inflation, although some notable exceptions have occurred in recent memory like the 1987 Black Monday stock market crash, the 2008 financial crisis and the 2020 coronavirus pandemic, so profits are by no means guaranteed.

Knowledge is power in the world of trading and investing. If you educate yourself about the markets and stocks you plan on operating in and stay well-informed, you will probably make more profitable transactions.

Above all, one of the most important things to remember when trading speculatively is to refrain from using anything other than risk capital, which is money you can easily afford to lose. Investors also generally aim to maximize returns while preserving the value of their initially invested capital, so taking excessive risks should generally be avoided when investing in the stock market.

Successful investors and traders have typically developed excellent research skills they use to build their accounts and portfolios. Keep reading to find out which analysis techniques work best to generate trading and investment ideas and how to turn them into profits.

Review the Company's History

Check Analyst Ratings

Review stock charts, read the news, check current indicators, consider the value of the investment, how much should you research an investment, should you research stocks before selling, best stock research platforms, benzinga vs. benzinga pro, frequently asked questions.

Stock research has many facets. Depending on your trading or investment style, you might choose to operate based on technical analysis or fundamental analysis. You can also use a combination of both market analysis methods, which is how most successful professionals research stocks.

Technical analysis is largely based on market observables like volume, open interest and the price action that responds to the forces of supply and demand. Technical analysts typically spend time interpreting stock charts and stock indicators to find misvalued stocks or to time their trades in stocks that have recently shown a notable price move.

In contrast, fundamental analysis focuses on factors like a company’s earnings in relation to its stock price or price-to-earnings (P/E) ratio compared to other companies in its sector. Other key fundamental observables for a company that can be analyzed include its revenue, net income and return on equity.

In addition to these traditional market analysis methods, stock traders and investors use a number of modern tools to select promising stocks. These tools include online stock screeners, industry research websites like Benzinga and professional online newsletters published by successful traders and investors.

The following research methods have traditionally been used by traders and investors to achieve excellent results. The more you know about your potential investments, the more confident you’ll be pulling the trigger on the stocks you’ve researched.

Review the Company’s History

A company’s history gives you a good idea of its future potential and the prospects of its stock. The main reason companies issue stock and sell shares to the public is to raise capital to expand. This allows the public to participate in the company’s success once its earnings increase.

The company’s history can be viewed technically by reviewing stock price charts and fundamentally by researching the 10-K and 10-Q forms that all publicly listed companies must file with the Securities and Exchange Commission (SEC).

Form 10-K is an annual report that includes the company’s balance sheet and other key financial data. Form 10-Q is a quarterly report that gives researchers updated information on the company’s activities, operations and financial results for the quarter.

These reports often contain an overwhelming amount of information, so it’s best to select several key items to research such as:

Net income: Generally listed on the last page of the company’s income statement, net income represents a company’s bottom line earnings number. It consists of the total amount of money the company made after expenses, depreciation and taxes.
Revenue: Sometimes referred to as the top line because it generally appears at the top of the company’s income statement, revenue is often divided into operating revenue that comes from a company’s general business and nonoperating revenue that typically includes one-off business activities.
Earnings per share (EPS): EPS is calculated by dividing the earnings amount by the number of shares outstanding. This number represents the amount of money the company made on a per-share basis.
Return on equity (ROE): This number indicates the return in percentage terms of the company’s profit made off the money shareholders invested because “equity” means shareholder equity in this context.
Return on assets (ROA): This figure shows the percentage of profits generated by the dollar amount of the company’s assets.
Stock price-to-earnings ratio (P/E ratio): This measures the company’s current share price relative to its EPS. For example, if a company’s stock trades at $30 per share and earns $3 per year, then its P/E ratio would be 10, meaning the stock trades at 10 times its yearly earnings. This metric gives investors a better idea of a company’s valuation and whether the company may be over or undervalued.

You can review a company’s history along with other financial data on Benzinga’s website, and you can do even more in-depth research on individual stocks using Benzinga Pro . Benzinga provides investors and traders important company information, stock charts and advanced stock indicators. An example stock analysis page appears in the image below.

Another useful tool for fundamental stock research consists of the analyst consensus on the stocks you’re interested in. Benzinga provides an excellent resource for this valuable information by giving you the most important stock analyst metrics. These include:

Upgrades, downgrades and initiations: You can see which companies’ stocks have been upgraded or downgraded and those where analysis has been initiated by major stock analysts.
Upside/downside: This figure shows, in percentage terms, the amount analysts expect the stock to rise or fall.
Analyst firm: Indicates which major market analyst, bank or brokerage has made the prediction for a stock’s future.
Price target change: Shows the original price forecast and the change from the original forecast with a red range indicating a downgrade in the analyst’s price target and a green range indicating an upgrade. If no change is expected, the number appears in black.
Rating change: Indicates whether the analyst has maintained, downgraded or upgraded their previous rating.
Previous/current rating: Shows whether the analyst considers the stock a buy or sell, a strong buy or sell or market neutral. Also indicates if the stock is a hold, if it is likely to outperform or underperform its industrial sector and whether they recommend over, under or equal weighting the stock relative to its sector.

Performing technical analysis on stock charts is one of the most accurate and objective market analysis methods used as a form of stock research by many successful traders and investors. Benzinga offers users the most sophisticated charts provided by TradingView. This lets you access advanced charts you can easily customize to fit your specific stock research needs.

The most important news for individual stocks are quarterly and yearly earnings releases, the introduction of new products and the issue of new stock in the company. Other pertinent news involves insider transactions, which consist of the purchase and sale of a company’s stock by company officers and major shareholders.

Macroeconomic news, news covering the general market and geopolitical events also influence stock prices. Therefore, keeping a keen eye on the news helps traders and investors find opportunities or indicate when to initiate or liquidate existing positions.

In addition to providing some of the best charts available on the internet, Benzinga offers the latest news on just about every U.S. and foreign listed stock. Stocks typically react quickly to financial news, whether positively or negatively, so keeping an eye on the news of stocks you hold or plan to buy makes sense.

The speed with which you get this news also determines whether you can take advantage of it before the market moves to fully discount the new information, and Benzinga boasts that it offers “the fastest newsfeed in the game.”

Becoming more familiar with technical and fundamental indicators can only improve investors' and traders' familiarity with the stock researched and should eventually lead to making more profitable transactions. You can review both fundamental and technical indicators at the Benzinga or Benzinga Pro websites.

Key fundamental indicators include economic data releases like gross domestic product (GDP) that provide a sense of the strength of the overall economy a company operates in. They can also include important company metrics for a particular stock, like its EPS, its dividend payout and consistency, its debt ratio and its P/E ratio. Such indicators give investors a look into a company’s profitability and how it deals with its responsibilities to shareholders.

Popular technical indicators can include the Relative Strength Index (RSI) and moving average convergence divergence (MACD), which give investors an idea of a company’s share price is fairly valued, undervalued or overvalued.

You can take into account a company’s business, business model, management and the measures it takes to increase profits to determine its fair value. Your detailed research may indicate that a company’s value may not be accurately expressed in its stock price, and so it may look undervalued or overvalued as a result. This suggests an opportunity for profit may exist.

As you research stocks, you’ll become aware of the intrinsic and nonintrinsic value of each company’s stock you review closely. According to business magnate Warren Buffet, one of the world’s most successful investors, only stocks showing solid fundamentals, strong earnings and potential for continued earnings growth should be considered for long-term investments.

On the other hand, while companies that show little intrinsic value may be good for short-term speculative trading profits, they typically do not make the best investment options.

The amount of research you conduct before taking a position in a stock depends in large part on how comfortable and confident you feel toward the potential investment. Successful investors and traders could be likened to a master detective who collects all the important facts about a company before making a decision to invest or trade in its stock.

Keep in mind that even the best research does not guarantee profitable results. Research just increases the likelihood of you experiencing a satisfyingly profitable transaction in the stock market.

Research certainly doesn’t stop after you’ve invested in a stock or other asset. Your research should also include a price level at which you would like to liquidate your investment.

Also, stock market or other financial news may adversely affect your trade or investment. This means you should definitely do some research before selling any stocks you hold.

Together, Benzinga and Benzinga Pro offer some of the most complete datasets on the financial markets and their various components, providing extensive research and market analysis resources for traders and investors at all levels.

Benzinga Pro builds on Benzinga’s more basic offerings by also giving users access to an actionable real-time news feed and in-depth technical and fundamental analysis tools for stocks and a slew of other assets and derivative products.

What is the best way to research a stock?

It depends entirely on each individual trader and investor. Many successful traders combine fundamental and technical analysis, which seems to be the most complete way to research a stock, although some traders prefer the objectivity and relative simplicity offered by using technical analysis alone to scan markets and time transactions.

What is the best site to research stocks?

The Benzinga website and its more comprehensive Benzinga Pro offerings have some of the most complete and timely resources for researching stocks you can find online.

How do I find information about stocks?

To find information about stocks, there are several reliable sources you can use. One option is to visit financial news websites such as Benzinga, Bloomberg, CNBC, or Yahoo Finance, where you can find up-to-date information on stocks, including their performance, news, and analysis.

Additionally, you can utilize online brokerage platforms like Interactive Brokers, Webull, or Robinhood, which provide comprehensive information on stocks, including real-time quotes, charts, company profiles, and financial reports.

About Jay and Julie Hawk

Jay and Julie Hawk are a married financial writing and authorship team who co-founded TheFXperts, a notable financial writing services provider. The Hawks each worked professionally in the financial markets and have more than 40 years of trading experience among them. Together, they write books, trade forex online for their own account and others, mentor traders, and have worked actively as professional freelance writers specializing in financial topics for over 15 years.

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Stock Analysis Is a Process

Best to start where you are, what to analyze, the bottom line.

Fundamental Analysis

How to Become Your Own Stock Analyst

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

Valuing a Company: Business Valuation Defined With 6 Methods
Valuation Analysis
Financial Statements
Balance Sheet
Cash Flow Statement
6 Basic Financial Ratios
5 Must-Have Metrics for Value Investors
Earnings Per Share (EPS)
Price-to-Earnings Ratio (P/E Ratio)
Price-To-Book Ratio (P/B Ratio)
Price/Earnings-to-Growth (PEG Ratio)
Absolute Value
Relative Valuation
Intrinsic Value of a Stock
Intrinsic Value vs. Current Market Value
Equity Valuation: The Comparables Approach
4 Basic Elements of Stock Value
How to Become Your Own Stock Analyst CURRENT ARTICLE
Due Diligence in 10 Easy Steps
Determining the Value of a Preferred Stock
Qualitative Analysis
Stock Valuation Methods
Bottom-Up Investing
Ratio Analysis
What Book Value Means to Investors
Liquidation Value
Market Capitalization
Discounted Cash Flow (DCF)
Enterprise Value (EV)
How to Use Enterprise Value to Compare Companies
How to Analyze Corporate Profit Margins
Return on Equity (ROE)
Decoding DuPont Analysis
How to Value Private Companies
Valuing Startup Ventures

Nobody asks you to become your own doctor or your own lawyer, so why should anybody ask you to become your own stock analyst? Some people like to take up cooking simply because they enjoy doing it. Similarly, there are people like Warren Buffett who enjoy the process of making investments.

Therefore, if you are an investor who likes to be self-reliant, then you should consider becoming your own stock analyst. With a big question mark hanging over some analysts about their credibility, it is always better to learn the ropes yourself. Read on to find out how you too can think like an analyst, even while sitting at home.

Key Takeaways

Wall Street often relies on analysts' estimates based on corporate financial data to recommend stocks and determine their target prices.
Individual investors, too, can utilize the same type of fundamental analysis to identify potential undervalued stocks and set price targets.
Here, we go over some of the basics for researching stocks and starting to conduct your own analysis.

It doesn't matter whether you are an investor looking for growth or value, the first step in thinking like an analyst is to develop a probing mind. You need to find out what to buy or sell at what price. Analysts usually focus on one particular industry or sector. Within that particular sector, they focus on select companies. An analyst's aim is to deeply probe the affairs of the companies on their list. They do this by analyzing the financial statements and all other available information about the company.

To cross-check the facts, analysts also probe the affairs of a company's suppliers, customers, and competitors. Some analysts also visit the company and interact with its management in order to gain a first-hand understanding of the workings of the company. Gradually, professional analysts connect all the dots to get the full picture.

Before making any investment, you should do your own research. It is always better to research several stocks in the same industry, so you have a comparative analysis. Access to information isn't usually an issue. The biggest constraint in becoming your own stock analyst is time. Retail investors who have many other things to do may not be able to devote as much time as professional security analysts . However, you can surely take up just one or two firms, in the beginning, to test how well you can analyze them. That would help you in understanding the process. With more experience and time, you can think of putting more stocks under your lens.

Looking over analyst reports is the best way to start your own analysis. That way, you save a lot of time by cutting short preliminary work. You don't have to blindly follow sell-or-buy recommendations that analysts make, but you can read their research reports to get a quick overview of the company, including its strengths and weaknesses, main competitors, industry outlook, and future prospects. Analysts' reports are loaded with information, and reading reports by different analysts simultaneously would help you identify the common thread. Opinions may differ, but basic facts in all reports are common.

Furthermore, you can take a closer look at the earnings forecasts of different analysts, which ultimately determine their buy or sell recommendations. Different analysts may set different target prices for the same stock. Always look for the reasons while reading analysts' reports. What would have been your opinion about the present stock given the same information? No clue? Then move on to the next step.

To arrive at your own reliable conclusion about a stock, you need to understand the various steps involved in stock analysis . Some analysts follow a top-down strategy , starting with an industry and then locating a winning company, while others follow a bottom-up approach, starting with a particular company and then learning about the outlook of the industry.

You can make your own order, but the entire process must flow smoothly. Any process of analyzing a stock would involve the following steps.

Industry Analysis

There are publicly available sources of information for almost any industry. Often, the annual report of a company itself gives a good enough overview of the industry, along with its future growth outlook. Annual reports also tell us about the major and minor competitors in a particular industry. Simultaneously reading the annual reports of two or three companies should give a clearer picture.

You can also subscribe to trade magazines and websites that cater to a particular industry to monitor the latest industry happenings.

Business Model Analysis

You should focus on a company's strengths and weaknesses. There can be a strong company in a weak industry and a weak company in a strong industry. The strengths of a company are often reflected in things such as its unique brand identity , products, customers, and suppliers. You can learn about a company's business model from its annual report, trade magazines, and websites.

Financial Strength

Whether you like it or not, understanding the financial strength of a company is the most crucial step in analyzing a stock. Without understanding financials, you cannot actually think like an analyst. You should be able to understand a company's balance sheet , income statement , and cash flow statements .

Often, numbers lying in the financial statements speak louder than the glossy words of an annual report. If you're not comfortable with numbers, and you want to analyze stocks, there's no time like the present to begin learning and getting comfortable with them.

Management Quality

Management quality is also a critical factor for a stock analyst. It is often said that there are no good or bad companies, only good or bad managers. Key executives are responsible for the future of the company. You can assess company management and board quality by doing some research on the Internet. There is a plethora of information out there about every public company.

Growth Analysis

Stock prices follow earnings, so in order to know whether a stock price will be moving up or down in the future, you need to know where future earnings are heading. Unfortunately, there is no quick formula that can tell you what to expect for future earnings. Analysts make their own estimates by analyzing past figures of sales growth and profit margins , along with profitability trends in that particular industry.

It's basically connecting what has happened in the past to what's expected to happen in the future. Making accurate enough earnings forecasts is the ultimate test of your stock analysis capabilities because it's a good indication of how well you understand those industries and companies.

Once you understand future earnings, the next step is to know about the worth of a company. What should be the worth of your company's stock? Analysts need to find out how much the current market price of the stock is justified in comparison to the company's value.

There is no "correct value," and different analysts use different parameters. Value investors look at intrinsic worth whereas growth investors look at earning potential . A company selling at a higher P/E ratio must grow at a higher price to justify its current price for growth investors.

Target Price

The final step is to set a target price . Once you understand the different ways to predict future earnings, you can calculate a high and low target price by multiplying estimated earnings per share (EPS) with the estimated high and low P/E Ratio.

The high and low target price is the price band within which the future stock price is likely to move in response to the expected future earnings. Once you know the target price, you can very well use it to reach your destination.

What Do Stock Analysts Do?

Wall Street stock analysts look deeply at a company's financial reports and announcements to conduct fundamental analysis . This is done to come up with a presumed fair value or price target and then to issue a recommendation to investors accordingly (e.g., buy or hold recommendations).

What Are Some Bottom-Up Tools for Stock Analysis?

Bottom-up analysis begins with a company's financial statements such as the balance sheet and income statement. From there, various ratios can be computed that reveal a firm's current and expected financial position. These ratios include, among several others, the debt-to-equity (D/E) ratio, the quick ratio , inventory turnover , and various price multiples .

What Should I Do If a Stock Rises Above Its Target Price?

If you are confident in your original analysis, a security should be sold for a profit once it reaches or exceeds its price target. You may want to first see if anything fundamental has changed that might raise the current price target, but otherwise use the proceeds from your sale to fund a new investment opportunity.

The ultimate goal of every investor is to make a profit, however, not every investor or analyst is good at it. Never blindly accept what stock analysts have to say and always do your own research. Not everybody can be an investing expert, but you can always improve your analytical skills when it comes to stocks.

Zurek, Martin, and Lars Heinrich. "Bottom-up versus top-down factor investing: an alpha forecasting perspective." Journal of Asset Management, vol. 22, no. 1, 2021, Pages 11-29.

Financial Accounting Standards Board. " Comparability in International Accounting Standards—A Brief History ."

FINRA. " Evaluating Stocks ."

FINRA. " Six Financial Performance Metrics Every Investor Should Know ."

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5 ways to research stocks like the pros

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Knowledge is power on Wall Street, and investing professionals have the reputation of being the most knowledgeable. But if you’re not a pro? Well, individual investors can still take advantage of many of the pros’ top techniques and turn some of their own knowledge into real investing success.

Individual investors have many advantages over the big institutional investors – especially the ability to invest with a long-term mentality and to buy out-of-the-way hidden gems. But they can also leverage information to identify some potentially high-flying stocks, too.

Here are a few of the best ways for individual investors to research stocks and get a leg up on their professional counterparts, as well as one way they can keep more of those gains.

How to research stocks like a pro

Here are five techniques that pros use to figure out what’s really going on in the market. Often these methods require a little more hustle than just reading the numbers on a screen or balance sheet, but you can also find out more that way than you could otherwise.

1. Use a stock screener

A stock screener is a great place to begin for investors on the hunt for new ideas. With a good stock screener, you can find stocks that are hitting 52-week lows, if you’re a value investor , or new highs, if you’re looking for momentum stocks that could continue their trend.

You can pair this information with other financial details that are available in the screener, such as a company’s revenue growth, profit margins, debt and many more. You’ll want to look for a high-quality screener so that you can get highly granular – and fully up to date – information.

You can find stock screeners at some of the top brokers , but you may want to hunt around for one that fits your exact needs and process best.

2. Talk to management teams

It may seem like the management teams are off-limits to individual investors, but not always. Sure, Meta Platforms CEO Mark Zuckerberg is not likely to take your call, but you have a real chance to ask questions at smaller firms, where execs will speak with current or future investors.

You’ll want to have pertinent questions lined up that show you know the business, and it can be a moment to ask insiders the finer points about the business. Even if you can’t get on the phone with the top brass, you can access a public company’s investor relations department. IR, as it’s known, can give you financial details or perspective on a press release, among other things.

It can also be helpful to ask a management team which other companies they respect most in the industry and why. This line of questioning can give you a good perspective on which rivals are worth watching – and they may even be worth investing in, too.

3. Do your own first-hand research

Getting out from behind the desk can be a great way to find out what’s actually going on before it breaks big. That’s classic advice from investing legend Peter Lynch , who recommends watching for new trends emerging with friends, whether it’s a new product or service.

Have you heard about a great new restaurant in the area? Check it out yourself and see what you like and whether its operation is running smoothly. Your neighbor likes a new tech gadget? See for yourself what it’s all about – and then assess if the company is worth an investment. (Are you a beginning investor? Here’s how to invest in stocks .)

This way is great for finding a hot new consumer brand, especially in the restaurant or retail spaces. Food fans could easily have picked up future high-flyers such as Chipotle and Panera before they became big household names. Even if investors didn’t get in at the bottom, these restaurants had years of attractive growth remaining in them after they were “discovered.”

4. Run your own channel checks

Especially for consumer or retail brands, you can do some of what Wall Street analysts call “channel checks.” A channel check is a fancy name for actually seeing what amount of product is moving through the system. A channel check can give you valuable information about what’s happening now before it shows up in the reported financial statements in three or six months.

For the pros, a channel check might involve calling up suppliers and customers of a target investment and seeing how much business the company is doing. In the case of individual investors, you can do much of the same with consumer brands, asking questions such as:

Is that new product getting shelf space at your local grocery store?
Is the product getting more space over time or less?
Is the parking lot at that hot new chain restaurant or retail shop getting even more crowded?
Or maybe the restaurant is getting less crowded or getting poor reviews?

You can run your own channel checks and see trends that might not show up in the results yet.

5. Subscribe to a newsletter

An investing newsletter is a great resource for individual investors, and it’s a technique that pro investors use as well, though the two kinds of newsletters typically focus on much different analysis. Still, a good newsletter can help individual investors find and evaluate good investment opportunities, and give them a wider perspective, since the market is so large.

It may seem like Wall Street investors are omniscient, but they outsource a lot of research to third parties. That’s exactly what individuals can do, but they may have an additional advantage, because they can invest in small, high-growth businesses that the big investors can’t touch. Plus, you may have the added advantage of bouncing good stock ideas off the newsletter pros.

Look for a reputable newsletter company with a long track record and a history of treating subscribers well. In some cases, you can find good newsletters for a few hundred dollars a year.

How to really let your money compound

While Wall Street has a reputation for being knowledgeable, success is not all about having the most info. The best investors really know how to minimize taxes and keep more of their money. So you’ve researched and found a great stock – here’s how to keep your gains compounding.

You may have found an undervalued stock that should go up to fair value and then you’ll sell. Or you may hunt for compounders, stocks that can grow for years, even decades. Think of PayPal, Amazon , or Starbucks, for example. It’s a classic dilemma between growth and value investing .

But whether you’re a value or growth investor, it’s important to realize that if you sell a winning investment in a taxable account, you’ll be liable for taxable gains ( at either the short- or long-term rates ).

Instead, by not selling, you’ll defer any taxes, meaning that the wealth remains yours. But not only do you avoid the taxes, you’ll be able to compound on the full pre-tax amount each year. To be clear, you will always still need to watch out if you owe taxes or not, but by allowing the investment to compound, you give yourself a better chance for the investment to grow beyond what it would have been had you cashed out earlier.

For example, imagine you invested $10,000 and gained 20 percent annually but sold right at the end of the year, incurring a tax rate of 20 percent. In five years you’d turn $10,000 into $21,000, and average about 16 percent annualized gains, since the government took its cut each year.

But what if you held your stock during that whole period? You’d compound the whole amount at 20 percent annually, turning $10,000 into just over $24,883. Even if you decided to sell at that point, you’d still realize an after-tax amount of about $21,906 – more than in the first scenario.

The difference? You’ve compounded further gains on top of the gains you had to pay taxes on in the first scenario. In effect, by not selling your stock, you’re forcing the government to defer its taxes and to give you the ability to keep compounding on the full, pre-tax amount.

That’s how legendary investors compound their gains when it makes sense. It’s not just a question of having the best research but also using it the best, in this case by minimizing taxes.

Bottom line

While it’s easy to lament that Wall Street pros have huge advantages over individual investors, even the little guys have ways to use some of the pros’ techniques. And in some cases, individual investors even have advantages that large investors can never take advantage of.

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.

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Tuesday Dec 12 2023 06:16

How to apply proper research on Stocks

As an investor, conducting thorough research is the key to making informed decisions about which stocks to buy and sell. You need to develop a systematic approach to evaluating stocks to determine their potential and risks.

Some areas you should focus your research on include the company's financials, industry trends, competitive position, and growth opportunities.

By gaining a holistic understanding of a stock through diligent research, you can make strategic investment decisions and build a portfolio poised for long-term success.

Understanding company fundamentals

To research stocks effectively, you must analyze a company's fundamentals. This includes examining their financial statements and key metrics to determine the overall health and potential of the business.

Financial statements like the income statement, balance sheet, and cash flow statement provide a view into the company's financial performance, financial position, and how they generate and spend cash.

Review revenue and profit trends, debt levels, cash reserves, and other key metrics. Compare these figures to industry averages and competitors to determine if the company is performing well relative to the market.

Also evaluate the company's business model, competitive advantage, and growth opportunities. A strong, defensible business model and competitive advantage, like proprietary technology or brand power, can drive future success. Consider the size and growth rate of the total addressable market to determine if there are substantial expansion opportunities.

Monitor risks and challenges the company may face, such as economic downturns, new regulations, or disruptive technologies that could impact operations. Determine if the company is well-positioned to adapt to these potential risks.

By thoroughly analyzing company fundamentals, financials, business models, growth opportunities, and risks, you can make a well-informed decision about whether a stock has the potential for strong, long-term performance . Conducting high-quality research is the key to smart investing.

Analyzing financial statements and ratios

To determine if a stock is worth investing in, you need to analyze the company’s financial statements and key ratios.

Income statement

The income statement shows the company’s revenue, expenses, and profits over a certain period. Look for consistent or growing revenue and net income. Declining revenue or losses could indicate problems. Compare income statements over multiple years to identify trends.

Balance sheet

The balance sheet provides a snapshot of the company’s assets, liabilities, and shareholder equity. Analyze trends in cash, inventory, accounts receivable, debt levels, and shareholder equity. Look for a stable balance sheet with limited debt. High debt levels mean higher risk.

Cash flow statement

The cash flow statement shows the flow of cash into and out of the business. Look for positive operating cash flow, indicating the company generates enough cash to fund operations. Negative operating cash flow could mean financial troubles.

Calculate ratios like price-to-earnings (P/E), return on equity (ROE), and debt-to-equity (D/E) to determine if a stock is overvalued or risky. A high P/E could mean a stock is overvalued. A low ROE or high D/E ratio indicates higher risk. Compare ratios to industry averages and the company’s historical ratios.

By thoroughly analyzing financial statements and ratios, you can determine if a company has a solid financial position and valuation. This helps identify stocks with strong potential for long-term growth and stability. With diligent research, you can make prudent investment decisions.

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Evaluating competitive landscape and market conditions

To properly research stocks, you must evaluate the competitive landscape and current market conditions.

Competitive landscape

Examine the company’s direct competitors by looking at their financial reports, product offerings, and market share. Determine how the company stacks up in terms of:

Financial stability and profitability
Product pricing and quality
Customer loyalty and brand recognition
Barriers to entry for new competitors

Consider how changes in technology, regulations, or consumer preferences might impact the competitive environment. Look for signs the company has a durable competitive advantage that could lead to long-term success.

Market conditions

Analyze the overall stock market and industry the company belongs to. Look at key indicators like:

The trend in the stock market index and industry over the past 1-3 years. Rising markets generally mean more opportunity for stock price appreciation.
Inflation and interest rates. Low-interest rates often boost stock prices, while high inflation reduces the value of future cash flows and dividends .
Economic growth. A strong, growing economy with low unemployment points to a healthy market for goods and services, benefitting most companies.
Consumer confidence and spending. When consumers feel optimistic and spend freely, most companies will thrive.

Consider how the economic and market outlook might influence the company’s revenue, costs, and stock price. Favourable conditions now could mean a good time to invest, while warning signs point to greater risk.

By analyzing the competitive landscape and market conditions, you will gain valuable insight into a company’s business environment and potential for future success. This helps determine whether the stock deserves further consideration as an investment.

Bottom line

With proper research techniques and tools at your disposal, you can make informed decisions about which stocks to invest in for your portfolio.

While it will take time and practice to become highly proficient, start by focusing on a company’s fundamentals, growth prospects, and competitive position.

Check multiple sources to confirm the facts and look for any red flags.

The stock market is constantly changing, so continue researching to achieve the best results from your investments.

With diligence and patience, you can find the stocks that match your financial goals.

Head over to markets.com to start trading stock CFDs now!

“When considering “CFDs” for trading and price predictions, remember that trading CFDs involves a significant risk and could result in capital loss. Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be considered investment advice.”

Written by:

Danesh Ramuthi

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How To Research Stocks: A Beginner’s Guide

Key Takeaways

Types of stock analysis

How to research stocks

Example of stock research

The stock market is one of the greatest wealth-building vehicles ever created by the U.S. economy. Since the S&P 500’s inception, annual returns have averaged 10.7%. A simple investment in the S&P 500 index has paid off well for long-term investors. Nonetheless, a large contingent of investors have been able to outperform the broader market by picking individual stocks. Choosing which stocks to invest in over an index fund can expose investors to more risk, but the returns to the upside are exponentially more attractive. In order to beat the market, however, investors will need to learn how to research stocks ; for most, that means conducting a fundamental analysis of individual equities.

How To Analyze Stocks

Stock prices are directly correlated to the global economy and its impact on investor sentiment. In other words, stock prices usually fluctuate based on how investors feel about a certain company and the macroeconomic conditions most likely to impact its future. That said, there are seemingly infinite factors that can impact the trajectory of a stock. Whether it is an accounting error on the company’s behalf or a multi-year pandemic, stock prices will move in the direction investors are convinced they belong.

Unfortunately, there are simply too many factors that can influence a stock price to account for them all. As a result, investors have developed several ways to research stocks in an attempt to uncover their true value. Despite their flaws, however, two strategies have risen to prominence. Any investor who wants to learn how to research stocks should attempt one of the following strategies:

Fundamental Analysis: As its name suggests, a fundamental analysis attempts to assume an equity’s true value based on fundamental indicators. Instead of assuming that a stock’s price is directly correlated to the intrinsic value of the underlying business, an in-depth fundamental analysis will determine the closest thing to a stock’s true value by looking at anything and everything that can affect its future share price. A thorough fundamental analysis will account for everything, from secular economic trends and the state of the economy to the number of outstanding shares and the quality of the management team. A number of valuation metrics have been created to assist investors in conducting a fundamental analysis, but the goal is always the same: to provide investors with a share price they can use to determine whether or not the equity is valued fairly relative to its peers.

Technical Analysis: Contradictory to its fundamental counterpart, a technical analysis ignores fundamental indicators. Instead of determining an equity’s fair value by assessing economic and financial indicators in relation to the company’s products or service, a technical analysis seeks to predict a stock’s price by referencing historical market performance. In other words, a technical analysis uses past performance to try and predict where a stock’s price will be in the near future. In studying the convergence of several statistical trends, like price and trading volume, a technical analysis will theoretically be able to tell investors where a stock price is going based on past performance.

To be perfectly clear, it is not possible to analyze a stock without an inherent degree of error; even these two stock research tools have their flaws. There is no way to predict the stock market or the direction individual equities will trend, but there is a way to place time on your side. With a sound stock analysis process, investors can increase their odds of beating the market over the long term and finding the best stocks to buy now .

How To Research Stocks In 4 Steps

In the event investors want to forego the technical analysis process and focus on researching an individual stock, they will be confronted with several options. Every investor and outlet, for that matter, probably has their own way to research stocks. That’s not to say one way is better than the other, or that there is only one way of analyzing equities, but rather that there are some universal rules that tend to apply to each technique.

Anyone who wants to learn how to research stocks should apply the following steps to their own process:

Start With Company Financials

Focus on key information, conduct qualitative research, decide if the company is right for you.

The first step in a fundamental analysis involves quantitative research; that is to say, investors need to dig into the financial data of a respective company. Fortunately for anyone who wants to learn how to research stocks, the U.S. Securities and Exchange Commission (SEC) requires public companies to disclose many of their financial documents on a regular basis. In doing so, the SEC is able to protect investors, maintain a fair market, and facilitate capital formation. At the same time, investors may use the financial statements to gain a better understanding of a company’s performance.

Not surprisingly, financial statements can reveal a lot about a company’s financial position. Most notably, financial statements can tell investors a number of important facts, not the least of which include:

how money is made

whether or not revenue is growing

the total value of assets held

how much debt the company currently has

which direction cash is flowing

Financial statements can tell investors a lot about a respective company. However, the information necessary to research stocks isn’t relegated to a single financial statement; it is spread across several different statements. As a result, investors learning how to research stocks will also need to learn how to find and read the following financial statements:

Form 10-K: Filed once a year with the SEC, the 10-K is a collection of financial statements that have been audited by an independent third party. The 10-K is comprehensive and extensive and contains just about everything an investor learning how to research stocks needs. This particular form holds the company’s income statement, balance sheet, and cash flow statement. The 10-K reveals how the business makes money, the risks it is exposed to, revenues and expenses, and insights offered by management.

Form 10-Q: Though not as popular as the 10-K for stocks research, the 10-Q is a quarterly report of unaudited financials. While less comprehensive, the 10-Q can still reveal a lot of information about a company and teach investors how to research stocks. A lot of the information found in a 10-Q can be found in a 10-K but on a quarterly basis.

Each of these reports can be found relatively easily. In fact, the first place to look for each report is on the company’s own website. Most publicly traded companies have dedicated “investor relations” pages to divulge the necessary financial information. In order to research stocks and their financials, simply navigate to the company’s investor relations page and look for the most recent report. While each website has their own way of doing things, the financial information most investors are after is usually under a “news,” “press releases,” or “financials” tab.

In addition to the company’s own website, financial statements may also be found on the SEC’s website. More specifically, the SEC’s Electronic Data Gathering, Analysis and Retrieval (EDGAR) website offers investors a searchable database to research stocks.

Last, but certainly not least, are the stock research tools provided by today’s many brokerages. Most online brokerages provide all of the financial information investors need to research stocks. The information available will vary from brokerage to brokerage, but is primarily found on each equity’s summary page.

Financial statements can be dry to read and intimidating for anyone trying to learn how to research stocks. Nonetheless, they are full of valuable information for those willing to put in the time. In order to make reading financial statements a little easier, investors should focus on the most important metrics outlined in the next section.

Financial statements are full of numbers anyone learning how to research stocks may not understand. At the very least, the quantitative data required by the SEC is comprehensive and intimidating to anyone who doesn’t know what to look for. As a result, new investors should focus on the most important numbers. That’s not to say the rest of the reports should be ignored, but rather that new investors will probably get the most out of the following metrics:

Revenue: Often referred to as “the top line,” revenue is the first line item on the income statement and denotes the total amount of income generated by the company. Revenue may be broken down into two metrics: operating and non-operating revenue streams. Operating revenue is generated from the company’s core business. Non-operating revenue identifies money brought in from a one-time business activity.

Net Income: Net income is the last line item on the income statement and is also referred to as “the bottom line.” As its name suggests, net income represents the money a company has left over after operating expenses, taxes and other costs are subtracted from revenue.

Earnings Per Share: When investors divide earnings by the number of outstanding shares, they reveal the earnings per share metric. The earnings per share suggests how profitable a business is on a per-share basis. While far from a perfect metric, earnings per share does give investors a good way to compare two stocks with different totals of outstanding shares.

Price-To-Earnings Ratio: True to its name, the price-to-earnings ratio represents the ratio of a company’s share price to the company’s earnings per share. In doing so, investors may determine if a stock is overvalued or not.

Price-To-Earnings Growth Ratio: The price-to-earnings growth ratio isn’t typically on financial statements, but investors may calculate it using metrics found on reports. Investors will first need to divide the company’s share price by its EPS (earnings per share). Next, take the resulting number and divide it by the earnings per share growth rate. The resulting PEG ratio will give investors a better idea of the company’s future profitability relative to each share.

Price-To-Book Ratio: Otherwise known as the P/B ratio, the price-to-book ratio is a metric used to compare a stock’s current market value to its book value. A company’s book value is how much it is worth according to its balance sheet—less depreciation, amortization, and any other costs devaluing the assets. With the P/B ratio, investors may value a company’s equity relative to the assets it holds. For context, any company with a P/B ratio under one is generally considered a good value.

Debt-To-EBITDA Ratio: EBITDA is an acronym for earnings before interest, taxes, depreciation, and amortization. Therefore, the debt-to-EBITDA ratio gives investors an idea of how much income a company has to pay down debt before accounting for interest, taxes, depreciation, and amortization. In other words, this ratio tells investors how capable a company is at paying off its known debts.

With most of the financial information accounted for, investors should turn to a more qualitative process. Instead of looking at numbers and data, investors need to take a closer look at the business itself and how it operates. Getting down to the basics of the business can tell investors a lot about a company, and can be as simple as answering the following questions:

How does the business make money?: While it is usually obvious how a public company makes money, there are many exceptions. In fact, many up-and-coming tech companies aren’t even profitable at all. That said, it is important to not only know how a company makes money, but whether or not it is even profitable. Doing so will help analyze a stock at any cycle in the economy.

How big is the company’s moat?: Not unlike the moat found around a medieval castle, a stock’s moat helps protect the business. More commonly referred to as a competitive advantage, a moat is something that helps differentiate the business from its competitors. The wider the moat, the more likely a business is able to maintain or grow its competitive advantage over time.

How much experience does management have?: Management plays a pivotal role in the development and growth of a business. Great management is entirely capable of taking a company to the next level. Therefore, it is important to evaluate management’s experience and track record.

What are the potential risks?: When evaluating a stock for its potential, it is also important to look at the risks which pose a threat to future growth. If for nothing else, knowing what can hurt the stock is just as important as knowing what can help it. Understanding risk helps put things into perspective and prevents overallocation into a single equity.

What values does the company exercise?: When learning how to research stocks, investors should take a minute to evaluate the values each one exhibits. Values can play a big role in stock performance, and can even align with an individual investor’s own values. It is always important to invest in the stocks which support the future investors hope to see, so it is never a bad idea to invest in stocks that support your own values.

When learning how to research stocks, investors must also learn a little about themselves. In particular, it is always a good idea to make sure the company fits into an existing investment strategy. The strategy for investing is just as important as the stocks that make up a portfolio, if not more so. Therefore, investors need to make sure the stock is the right fit for them and their portfolio.

For starters, investors should prioritize stocks that complement their investment strategy. Those with long-term investing horizons will most likely favor growth stocks with a lot of potential upside. Younger investors, for example, tend to build portfolios out of stocks with more upside over the long run. It is worth noting, however, that growth stocks tend to expose investors to a little more risk. Typically, growth stocks are small, unproven companies with a lot of upside. That said, the unproven nature of growth stocks coincides with more risk, which is more acceptable for young investors with plenty of time to make up for any mistakes.

Those on the verge of retirement, however, may want to avoid growth stocks altogether. Shorter investing timelines don’t grant growth stocks the ability to compound over time and expose investors to more risk; something older investors can’t afford. As a result, those with fewer years to invest tend to focus on bluechip stocks with proven track records. The stable nature of bluechip companies limits upside, but can serve as a trustworthy source of income.

When all is said and done, there are countless inviting strategies. Still, not all stocks are created equal; some are inherently better for investment strategies than others. With that in mind, investors need to make sure the stocks they choose to invest in meet their unique needs.

Example Of Stock Research

Now that investors have a better idea of how to research stocks, it may be helpful to see the aforementioned information put to work. Let’s say, for example, there’s an investor who wants to start a position in the rapidly growing semiconductor industry. After careful deliberation, the investor has decided to choose one of two companies: Advanced Micro Devices, Inc. (NASDAQ: AMD ) and NVIDIA Corporation (NASDAQ: NVDA ). Both companies are industry leaders, but it is hard to tell how a company is doing based on price alone.

Upon a closer look at each company’s financials, investors will notice the following (figures as of August 4, 2022):

P/E Ratio: 38.65

P/S Ratio: 7.02

P/B Ratio: 3.05

P/E Ratio: 51.52

P/S Ratio: 16.51

P/B Ratio: 18.25

When examining the two stocks, investors will notice NVIDIA has a higher price-to-earnings (P/E) ratio than AMD. While a high or low ratio isn’t necessarily indicative of a good or bad valuation, most investors will want to see the P/E of a respective stock somewhere around the neighborhood of 20 to 25. Since both of these companies are well over the 20 to 25 threshold, you could argue each company’s share prices are overvalued, relative to the earnings per share. However, with a lower P/E ratio, AMD currently looks like a better value.

Next, investors will notice AMD’s 7.02 price-to-sales (P/S) ratio is lower than NVIDIA’s 16.51. With a price-to-sales ratio that is less than half of NVIDIA’s, investors in AMD’s stock are theoretically paying less for every dollar of the company’s sales. As a result, AMD looks like a better value than NVIDIA on a price-to-sales basis.

The price-to-book (P/B) ratio will help investors compare each semiconductor company’s current market value to its book value. Traditionally, the lower the book value, the more a company can expect in return if it sold all of its assets at current market prices. Since AMD’s P/B ratio is lower than its competitor, it’s safe to assume it is a better value.

Looking at only the financial metrics would tell investors that AMD is a better valuation at its current price. As such, AMD should have a better opportunity to grow its share price. However, the market prices equities on more than just financials. It is at this point investors must conduct their own qualitative analysis and cross-reference their findings with the company’s financials.

For instance, while AMD may represent more of a value, NVIDIA is arguably the industry leader. Jensen Huang, NVIDIA’s CEO, is nothing short of a visionary and one of the primary reasons the company is doing so well. That’s not to say Lisa Su (AMD’s CEO) isn’t a brilliant manager, but rather that other factors need to come into play.

When learning how to research stocks: there’s one key takeaway for investors: there is no perfect way to research a stock. Different investors choose different reasons to invest in a variety of stocks, all with justifiable reasoning. That said, the stock research tools outlined above can give investors a better idea of which stocks will help portfolios the most.

Understanding how to research stocks is of the utmost importance to any investor who has made the decision to invest in individual equities. However, it is important to note that even the best research may be compromised. In fact, there is no universal strategy to research stocks that isn’t inherently flawed. If for nothing else, the macroeconomic environment by which Wall Street operates is too unpredictable for anyone to feel confident in. As a result, the best thing investors can do is work with the information they are given to give themselves the best chance of realizing success.

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5 Steps To Take To Do Stock Market Research on Your Own

Traders today have a major advantage when it comes to stock market research…

Thanks to the internet, there’s a ton of useful stock market information available to anyone looking for it.

In fact, there’s so much out there it can be difficult for new traders to sort through.

That’s why I wanted to cover five steps to take to do your stock market research.

Research is key for any trader — it’s like training for an athlete. You need to be able to do stock market research … And you need to know how to do it right.

In this post, I’ll go over the two main types of stock analysis and the best metrics to use in stock market research. I’ll also tell you where to find information to research stocks on your own.

So let’s get started!

Table of Contents

1 Stock Market Research: What Is It?
2.1 Fundamental Analysis
2.2 Technical Analysis
3 What to Analyze in Stock Market Research as a New Trader
4.1 Determine Your Goals
4.2 Have a Plan
4.3 Never Take Social Media Too Seriously
4.4 Check Your Sources
4.5 Take Advantage of Free Information
5.1 P/E: Price-to-Earnings Ratio
5.2 P/B: Price-to-Book Ratio
5.3 PEG: Price to Earnings Growth
6 How to Find Information for Good Stock Market Research
7 Stock Market Research Tools
8 Stock Market Monitor: How Do I Monitor the Stock Market?
9 Practical Example of Stock Market Research
10 Conclusion

Stock Market Research: What Is It?

Stock market research is gathering information on stocks or markets, then analyzing what it means for your trading.

There are a lot of free online resources you can use to do your stock market research … like the thousands of blog posts on StocksToTrade , or the videos on our YouTube Channel .

Types of Stock Analysis

There are two main ways traders analyze stocks…

Fundamental Analysis

Fundamental analysis looks at a company’s underlying metrics. These include earnings reports, debt, equity, sales, market conditions, and management.

Traders and analysts use fundamental analysis to figure out whether a stock’s price reflects the company’s growth prospects.

Technical Analysis

Technical analysis uses charts to look at things like price and volume data.

Historical price movements and trading volume can reveal patterns and trading behavior. Looking at the past can help you make informed decisions about what stock prices may do next.

For newbie traders , it can be confusing. How do you know what to look for, and where do you find it?

It’s helpful to have all the information you need in one place. StocksToTrade does that for you. It has great tools and features for zeroing in on potential trades and analyzing stocks. If you’re looking for an all-in-one trading platform, check it out. Get a 7-day trial for just $7 .

Take a deeper dive into technical analysis here.

What to Analyze in Stock Market Research as a New Trader

If you’re new to trading, begin by focusing on the basics…

Stock market research is much easier when you have a solid foundation. Start by learning the basics before moving onto the more advanced analysis.

Study the charts , learn the patterns , get to know the terms . You should be looking at charts until your eyes bleed!

The steps below can help you build your stock market researching skills, add to your trading knowledge, and make trading easier.

How to Research Stocks on Your Own: 5 Steps

Determine your goals.

The first step in doing your stock market research should be determining who you are as a trader … What are your goals?

Are you more of a day trader ? Position trader ? Long-term holder ? Short-seller? (I don’t advise shorting for new traders. It’s risky and a challenging strategy.)

If you’re a beginning trader, you need to figure this out. Once you figure out your trading style, you can start learning how to do your stock market research.

If you’re not yet sure of your trading style, start with paper trading . You get something close to real-world experience, without risking your capital. It’s how you can see what works and what doesn’t.

StocksToTrade has a great paper trading feature. You can enter your trades into the platform just as you would if you were placing them in the real world, and you get feedback on how they work out. Check out a 14-day trial for just $7 to start today! You’ll get all the features StocksToTrade has to offer, including paper trading.

Have a Plan

Every trader needs a trading plan . Think of it as a blueprint for a house … Nothing gets done without a plan.

When researching potential trade ideas, it’s good to know what kind of setups you’re looking for and which ones could best fit your trading strategy. A trading plan helps you do that.

With a good trading plan, you can see which stocks to avoid and which to add to your watchlist . A good plan will include an entry/exit strategy, and cover all possible outcomes.

A good trading plan will leave no room for surprises.

Never Take Social Media Too Seriously

Today it’s easy to get caught up in a social media trading frenzy…

On social media sites like Twitter or Reddit, you’ll see certain stocks get ‘pumped’ all the time.

They can become breeding grounds for pumps. We see them in chat rooms too.

That’s why it’s always a good idea for traders to take any trading information on social media with a grain of salt.

Even though some pumped stocks could turn into good potential trades, you have to know what you’re doing. So it’s important to have a trading plan in place and to do your own research before jumping into a trade.

However, as we saw with the GameStop saga earlier this year, sites like Reddit, Twitter, and Discord can also be great for traders…

Because of social media sites, traders from all around the world can communicate with each other like never before.

Bottom line … When doing stock market research, be aware that people posting on social media probably don’t have your best interests in mind. No one in the markets does.

Go in with your eyes open and learn how you can spot certain trends. Just be prepared to get in and out fast.

That’s why StocksToTrade has a built-in social media scanner that helps traders scan for trending tickers. Stay up to date and monitor trades all in one place!

Check Your Sources

There’s A LOT of information out there on the internet…

It’s easy to start your stock market research with the best intentions, only to find yourself going down a rabbit hole of made-up facts and conspiracies…

How can you avoid this? Check your sources. Take the time to double- or triple-check anything you read. Do your own fundamental and technical analysis of stocks. Don’t take the word of some random person in a chat room.

Take Advantage of Free Information

When it comes to stock market research, you could end up paying a lot of money for stuff you could have gotten for free, if you had just looked around.

At StocksToTrade we have TONS of free and no-cost information available to all traders…

Like the videos on our YouTube Channel and the episodes of our SteadyTrade podcast featuring many top trading pros as guests…

Take advantage of all of these free resources. They’ll help you improve your market knowledge and trading skills. Do the work and you could be well ahead of the game!

Top Metrics for Stock Market Research

When pro traders evaluate stocks for potential trade ideas, they usually use a few key metrics to help measure how a stock is performing.

These metrics show how a company is doing compared with its stock price.

P/E: Price-to-Earnings Ratio

Traders and analysts use the price-to-earnings (P/E) ratio to value a company based on its earnings performance relative to its stock price.

It’s measured by dividing a company’s current share price by its earnings per share (EPS).

P/B: Price-to-Book Ratio

Book value is what the company is worth on paper — the value of its assets. Price-to-book (P/B) ratio compares a company’s market capitalization with the actual value of its assets.

You can calculate the P/B ratio by dividing a company’s stock price per share by its book value per share.

PEG: Price to Earnings Growth

Traders and analysts use the PEG ratio to determine a stock’s value with potential earnings growth taken into account.

This is a much more speculative metric…

To calculate it, divide the P/E ratio by the growth rate of earnings for a specific period.

The PEG ratio can give a bigger-picture view of a stock.

How to Find Information for Good Stock Market Research

There are so many different ways to do stock research … The best way for you depends on your preference and your goals. Some traders like to read blog posts and articles … Others prefer to watch YouTube videos or listen to podcasts…

Whichever way you prefer is OK! Just as long as you do your due diligence, follow those five steps above, and double-check everything you hear.

Google a company. Check out its website and its earnings reports . Scroll through Twitter.

If the company’s fundamentals look good — or if you’re a day trader, even if they don’t — you could do technical analysis on the stock. Check out the stock’s chart and look for patterns based on historical data.

You can use technical analysis to build the case for trades. But to do it right, you’ll need a trading platform…

Stock Market Research Tools

Today’s traders have so many great research tools available to them…

WAY more than what I had available to me when I got started trading about 15 years ago. If you can figure out how to take advantage of these tools, it can give you a leg up.

StocksToTrade has great tools to help you find potential trade ideas.

StocksToTrade’s built-in, customizable scanners let you filter for the day’s top gainers, the stocks trading with the most volume — you can sort for just about any criteria you’d like.

Say you’re looking for stocks trading with high volume that have gained 10% on the day … You just plug the criteria into the search field and… done!

Once you find a stock that’s a potential trade, the charting and indicator features allow you to track its chart history and indicators like price and volume.

StocksToTrade was developed by traders, for traders. Check it out with a 14-day trial for just $7 today !

Stock Market Monitor: How Do I Monitor the Stock Market?

New traders might feel the need to sit in front of screens all day to monitor the markets…

With today’s technology, you don’t have to. You can set up alerts on your phone to let you know when something’s going on with the markets or the stocks you’re watching.

With the StocksToTrade Breaking News Chat , you’ll get real-time alerts for the news that has the potential to move stocks on your watchlist. Two market pros sort through the news as it happens and send subscribers the headlines that matter. It’s been a game-changer for me. Check it out today!

Practical Example of Stock Market Research

There are many different ways of doing stock market research. Here’s an example of one way to go about it…

Say you’re looking for the top percent gainers trading with the most volume. If you’re using a scanner, plug-in your criteria and generate a list.

Narrow the list to five or ten stocks and put the most promising ones on a watchlist . Now you’re ready to look at each company’s fundamentals and do some technical analysis.

The fundamentals aren’t always as important if you’re doing a day trade — you’re looking to profit from the stock’s movement, so you don’t necessarily care what the company does. You’re looking for patterns in a stock’s chart so you can plan your entry/exit strategy based on those patterns.

A stock’s chart history can give insight into where a stock might be headed. Patterns tend to repeat themselves over time … So looking at a stock’s chart can give you an idea of whether a trend may be about to reverse.

If a stock meets all your criteria, you’re ready to place a trade.

There you have it … 5 steps to improve your stock market research.

Remember, everyone’s different. No one strategy works for every trader out there. The best thing to do is find the style or strategy of research that best fits you and stick with it.

Stock market research used to be time-consuming. Now, thanks to technology, it’s MUCH easier.

It may take you a bit of time to filter through all the fluff and get to the information that matters … It may also take a while to figure out your trading style and the setups that fit your trading plan. That’s all part of the learning process.

As you refine your research techniques, remember to hone your trading plan and always stick to it. Study the charts, learn the patterns, and keep it simple!

And when you’re ready to take your trading to the next level, join us on the SteadyTrade Team . It’s an awesome community of dedicated traders who believe in sharing knowledge. See you there!

How do you research potential trades? Tell me in the comments!

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How to Research Stocks

Watch video: How to Research Stocks

Upbeat music plays throughout. On-screen text : Lou Mercer, CMT. Regional Investment Strategist Narrator : So, you got a "hot" stock tip from a coworker, and they sound convincing—what should you do next? The short answer is, do your homework. As astute as your coworker may be, it's important to conduct due diligence on any investment before you put your hard-earned money at risk.

Due diligence, or DD, is all about research—making sure that you understand how a company operates so you can decide whether it's a good investment.

On-screen text: Due diligence. 1. Earnings. 2. Capital structure. 3. Management. 4. Expectations. Narrator : There are many aspects to due diligence. One part could include fundamental analysis because it delves into a company's ability to make money. At its core, it's the process of analyzing a company's financial statements, and studying other trends and data. That can help you determine whether a stock is fairly valued, undervalued, or overvalued by the market. Fundamental analysis is a large discipline as well, but you don't have to do it all by yourself. You can determine how much you're going to do and what you want to leave to the experts. There are many parts to due diligence, and in this video, we'll discuss four core ones: earnings, capital structure, management, and expectations.

On-screen text: Securities and Exchange Commission. SEC.

Animation: Text is replaced by a sample 10-Q and then a sample 10-K report.

Narrator : To get started, you need to know where to get the right information. Publicly traded companies are required by the Securities Exchange Commission, or SEC, to report financial information to the public in quarterly reports called 10-Qs and annual reports known as 10-Ks. Despite the name, it's not a race but instead a document filled with hundreds of pages of detailed financial information that can feel like a marathon to read. But there are tools to help analyze them if you know where to begin.

Some of the most important financial information for a business shows up in what is known as an income statement. There, you can see how much money, or revenue, is left over after accounting for a company's expenses like paying employees and utility bills. The end amount is known as net income, profit, or earnings, and is a crucial part of understanding a company's value. This is because the stock market is a place where people come to buy and sell the future earnings of a company.

Animation: A sample illustration of a bar graph showing rising revenues and earnings for each quarter over two years. Revenues and earnings are generally rising.

Narrator : A common rule of thumb is that earnings and revenues should be growing—quarter over quarter and year over year.

But there's more you can do with that information, like compare how fast earnings are growing or determine how successful a company is at making a profit. But that would mean a lot of number crunching.

Animation: Four cards appear with different financial ratios. Net profit margin is net income over revenue. Debt to equity is total debt over total shareholders' equity. Price to earnings is market share price over earnings per share. Return on equity is net income over shareholders' equity.

Narrator: The crunching happens by taking data from these statements to calculate financial ratios. These ratios are standardized measurements that can help you analyze how well a company has performed, and what its future might look like.

Thankfully, the work has been done for you and you can get many of these tools and ratios for free in a more palatable way from most brokerages, like on the Research tab on schwab.com .

Animation: An equation is illustrated using a pile of cash labeled net income over a cash register labeled company's revenue. The peers and ratios comparison tool from Schwab.com replaces the ratio. It's set to overview. The net profit margin ratios for a company are highlighted. The "i" icon is selected and a graph of the net profit margin ratios for the company and some of its competitors appears.

Narrator : One example of a ratio is net profit margin, which compares a company's revenue, or the total sales before expenses, to net income—the money it has left over after all the expenses are accounted for. Net profit margin is represented as a percentage, and a company with high margins is usually able to manage its expenses. This could mean it's good at turning a profit. Profit margins, like other ratios, are great for determining if the company's growing compared to previous quarters and years. They're also good for comparing the company to its peers. Many investors identify top-tier companies by comparing ratios within an industry group.

Animation: The price-to-earnings ratio is illustrated with a stock certificate with a price tag over by a pile of cash labeled earnings per share. The price tag on the certificate changes to $20 and the pile of cash is changed to $1. The peers and ratios comparison appears again, it's still set to overview. The price/earnings line is highlighted.

Narrator : You can use the price-to-earnings ratio to see how much you're paying for a company's earnings and whether the stock is over or undervalued. It compares the price of a share of a company's stock to the company's earnings per share. If a stock is trading at $20 and its earnings per share are $1, then the stock has a P/E of 20. Some investors like to focus on companies with a lower ratio, believing it's a better value.

On-screen text: Due diligence. 1. Earnings. 2. Capital structure.

Narrator : Of course, there's other ways to examine revenue and earnings, but another core area of due diligence is a company's capital structure. It deals with how the business is funded.

Funding is done in a few ways, including selling equity by issuing stock shares or borrowing money in the form of things like bonds, mortgages, and other debt. If a company borrows money or incurs debt to make new products or otherwise expand, it can affect earnings. Debts have to be repaid, so they're essentially a claim on a company's future earnings.

A company with a good capital structure generally keeps its debt and other liabilities in check, while growing equity by retaining earning that can be reinvested into the company.

Animation: The peers and ratios comparison reappears on screen. It's now set to the Fundamentals tab. The long-term debt to equity line is highlighted.

Narrator : The debt-to-equity ratio is a good way to analyze how burdened a company might be by debt. A high ratio that is also higher than the company's peers could be a sign that the company has too much debt, which could be a drag on future earnings. However, debt levels vary from industry to industry, so peer comparisons are an important part of this analysis.

On-screen text: Due diligence. 1. Earnings. 2. Capital structure. 3. Management.

Narrator : I've talked about analyzing the books, but what about the people keeping the books? Management effectiveness analysis focuses on the ability of the management team to run the company, and it's one of a few soft data points that can be helpful when researching an investment.

Animation: The return on equity ratio is illustrated with a pile of cash labeled company's net income over shareholder's equity. The peers and ratios comparison reappears on screen. It's still set to the fundamentals tab. The return on equity line is highlighted.

Narrator : Successful management can seem abstract, but there's actually another ratio that can help grade how well management does at turning shareholder money into profits. It's called the return-on-equity ratio, and in this case, the higher the ratio, the better. It's calculated by dividing the company's net income by the average shareholder's equity. If a company has a higher number than its peers, investors might perceive that the managers are good at making money.

Animation: The peers and ratios comparison reappears on screen but is expanded to show the other ratings section. Analysts' ratings are highlighted in this area.

Narrator : It's not all about numbers, though. You can also find commentary directly from a company's management team on the company's investor relations website, in the 10-Qs and 10-Ks, and through analyst reports. Those statements can provide insights into what's on the minds of the people in charge, such as product promotions, growth expectations, or even potential dividends.

Animation: A sample 10-K report is on screen. The section titled macroeconomic conditions and related financial risks is highlighted. The page scrolls down to another section title business operations risks.

Narrator : Companies are also required to disclose any present risks they face, which may be an important factor in your investment decision. Risks can include lawsuits that could affect future earnings, or other trouble, like concerns that the company will struggle to market to certain customers.

That's a good reminder about the importance of diversifying the types of stocks you invest in. Investing in companies from several sectors and industry groups that don't usually rise or fall at the same time can help manage risk.

On-screen text: Due diligence. 1. Earnings. 2. Capital structure. 3. Management. 4. Expectations.

Narrator : While earnings growth, capital structure, and management are all important parts of conducting due diligence, much of what's being analyzed is in the past. Investors are most often concerned with the future prospects of a company. This is where the expertise of Wall Street analysts is helpful.

Animation : Three sample documents appear with different forward earnings estimates for three different companies.

Narrator : Banks and research firms around the world pay analysts to study many public companies. They publish frequent reports about their views, including what're known as forward earnings estimates that forecast what they think each company will earn for the upcoming quarter or year. They're educated guesses, but heavily researched ones that analysts make using their professional projections and models. Larger companies tend to attract more analysts, and the reports can be found through most brokerages, including Schwab.

Animation: The research tab on Schwab.com for a stock appears on screen. The screen scrolls down to the expected earnings section. Upcoming earnings and historical earnings are highlighted. Graphs for each estimate appear on screen with summaries and information related to earnings.

Narrator : Analyst estimates tend to be pretty big news when companies report earnings every three months. A company beating or falling short of estimates often result in big jumps or drops in the stock price.

Animation: A document titled analyst estimate appears. The earnings estimate is adjusted from $0.25 to $0.26 and then $0.27. A second company appears. Its estimate is reduced from $0.32 to $0.31 and then $0.30.

Narrator : However, outside of earnings announcements, positive adjustments to an analyst's estimates could be an indication the company may be doing better than expected. Negative estimate adjustments could be a bad sign for the company.

Animation: A bar graph titled cash flow growth appears on screen. The X axis is in years going out to 10. Each bar is made up of stacks of cash representing and estimate cash flow. The top portion of each stack of cash changes to red and a warning sign is placed over each bar. The red sections go away and the bars or stacks of cash shrink.

Narrator : Analysts estimates for the future growth of earnings can help investors calculate the intrinsic value, or fair market value, of a company. Anyone can calculate intrinsic value, but it's complicated. One method requires you to calculate earnings estimates for a company over a period of, say, five or 10 years, then discount those estimates based on how likely it is to happen.

Not only is the discounted future cash flows model complex, but it requires a few educated assumptions, so having analysts to rely on can be a big relief. However, if you are relying on someone else, even an analyst, make sure you understand their assumptions because they may have a different economic outlook, investing time frame, or bias, on the industry than you.

While a hot stock tip is exciting, without doing some due diligence, you could get burned. When you know what you're looking for and where to find it, it's a lot less overwhelming. Remember, the goal of due diligence isn't to make sure you know everything about a company. Instead, it's to help you evaluate the pros and cons so you can decide whether it belongs in your portfolio. On-screen text: Disclosure: On-screen text: [Schwab logo] Own your tomorrow ®

Schwab traders get in-depth research tools

How to Pick Stocks: Fundamentals vs. Technicals

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How To Analyse Stocks – 10 Ways To Pick Fundamentally Strong Companies

Last Updated on Dec 23, 2022 by

Investing in stocks can be rewarding when you research the issuing companies thoroughly. Gone are the days when information was inaccessible. With the advent of the internet, you have all the information you need about a company, like its revenue stream, products, financials, and other data, at your fingertips. Using this, you can analyse the desired stock in detail to assess whether it is a viable investment or not.

In this article, we will read about the types of stock analysis and understand how to analyse stocks using crucial pointers.

Table of Contents

Types of stock analysis

There are two types of stock analysis, as discussed below:

1. Fundamental analysis

This type of stock analysis evaluates the underlying company’s fundamentals – business segments, financials, management, past performance, peers, and so on. The fundamental analysis places importance on the stock’s intrinsic value and sectoral and broader economic conditions.

Under the financials, a fundamental analyst looks at financial ratios and financial statements such as the profit and loss statement , the balance sheet, and the cash flow statement that suggest how the company has performed so far and hints at how it can fare in the future.

Key takeaways:

Revenue, earnings, and future growth are important data points you can look at
Net profit margin , return on equity , and P/E ratio are among the key financial ratios

You can find all such details on Tickertape’s Stock Pages, which host comprehensive details about a company’s financials, peers, key metrics, and more. Let’s take the example of Reliance Industries Limited (RIL) .

Head on to the ‘Overview’ tab of Tickertape’s Stock Page to take a look at the key metrics of your favourite stock.

Fundamental analysis of stocks is based on the belief that the stock price reflects the growth of the company. In other words, as the company grows, the value of the share does too. As a result, if you invest in fundamentally strong companies and hold them for long, you would earn manifold returns depending on the stock performance.

2. Technical analysis

Conversely, technical analysis of stocks focuses on the trend in the stock price and doesn’t really study the company’s fundamentals. This type of analysis assumes that the stock price heavily depends on the supply and demand for the share and, thus, reflects the value of the stock. The technical analysis of stocks also believes that historical price movements indicate the stock’s future performance. Technical analysts typically look to profit from the short-term movement in stock prices.

Technical analysis is used by traders and short-term investors
Technical analysts use charts of stock prices to make trading decisions
Bollinger Bands , Ichimoku Cloud, and Relative Strength Indices (RSI) are a few key technical indicators

In addition to fundamentals, Tickertape’s Stock Pages also have specific technical indicators such as RSI and volatility . The following image compares a few technical indicators of Reliance with its peers.

How to analyse a stock before investing?

Nothing rewarding comes easy; the same goes for stocks. But we have tried our best to answer how to analyse a stock in a simple manner.

Research the industry in which the company operates

A group of companies involved in similar businesses make up an industry, such as manufacturing, services, chemicals, and so on. Analysing the industry to which a company belongs is paramount because it helps:

Evaluate the company’s performance compared to the industry as a whole
Identify macroeconomic factors that can impact your desired stock
Evaluate the prospects of the industry and your desired stock

Some good questions to find answers to are as follows:

What are the strengths of the industry?
What are the weaknesses of the industry?
How competitive is the industry?
How easy is it for a new company to enter the industry?
Are businesses in the industry cyclical in nature?

Once you get answers to these questions, you can decide whether you are open to investing in the industry. If yes, you can go on to analyse your desired stock.

Understand the underlying company and what it does

This is qualitative information. The best way to start is from the company’s website and annual reports. Study the company profile. Look at the company’s business model. What are its strengths and weaknesses? How many products and services does it offer, or how many revenue streams does it have?

Study the financial statements of the company

Next, analyse the company’s financials – balance sheet, profit and loss account, and cash flow statements of at least the last 5 yrs.

In the profit and loss statement, which details its profitability, look at the trends of the operating cost, revenue, net profit, operating expenses, working capital and other data points. Following is the income statement or the profit and loss statement of RIL.

In the above statement, you can see that RIL’s total revenue has been on an increasing trend except for FY 2022 when it saw a dip. But the following year, RIL recovered the dip and registered a revenue greater than FY 2020.

The balance sheet gives a picture of the company’s overall financial position. Here, analyse the company’s current and long-term assets, current and long-term liabilities, cash in hand, retained earnings, capital expenditures, contingencies, provisions, etc.

Finally, you can study the company’s cash position through the cash flow statement. Find out if it generates more cash than spending or vice versa. If the cash flowing in is more than what is flowing out, it is a good sign. The opposite may not be.

But remember that all these factors should be examined simultaneously and not in isolation. Only then can you draw meaningful conclusions.

For instance, if, in a particular year, the company has had negative cash flow, you need not conclude that it is a bad thing. Instead, try finding out the reasons. One possibility is that the company had made a capital expenditure that year. If this expense aids the company’s growth and adds to its revenue, it is good.

While at it, also evaluate the company’s debt or borrowings. Debt is not entirely a bad thing. For one, it gives access to financial resources that the company can use to fund growth and expansion. Second, it is less expensive compared to equity. However, if debt exceeds a limit, it can weigh down on the company’s performance. The reason is simple, debt carries interest, which eats into profits.

Study the management

A company is run by a group of people—the management. They are responsible for the future of the company and have the power to make decisions and formulate policies that impact the business. Under good management, a company can do wonders. But under bad management, even a strong company can fall apart. So it makes sense to study the management; find out – how experienced they are, how their decisions have contributed to the company’s growth, and so on.

Evaluate the prospects of the company

If you want to invest in a stock for the long-term, the company’s product and services must remain relevant for at least 15-20 yrs ahead. Otherwise, would you even profit from a company that shuts shop in the years to come?

Compare the stocks with their peers

Analyse how the stock you want to invest in has performed compared to its peers. While at it, make sure you compare apples to apples and not apples to oranges. Meaning a small-cap stock should be compared to a company under the same market cap category. Find answers to the following questions:

How much returns has the stock generated in a specific timeline, say 1 yr, 5 yr, 10 yr and so on?
Does the company have a competitive edge over its peers?
What are its upcoming projects, and how will that make the company better than its peers?
What is the PE ratio of the company compared to its peers?
What has been the company’s dividend per share, dividend yield and dividend growth rate of the company compared to its peers? (If the dividend is paramount to you)

The ‘ Peers ’ section on Tickertape’s Stock Pages allows you to compare a stock with its competitors based on ‘Stock Forecast’ as well.

Additionally, you can do a price comparison by choosing your desired stocks and adjusting the timelines, as you can see below.

Stock valuation

At this point, gear up to analyse the stock’s intrinsic value. In plain words, intrinsic value means a ‘fair price’. In stock parlance, it indicates whether the share is undervalued or overvalued. Truth be told, a stock has no ‘correct intrinsic value’. It is subjective and depends on the analyst.

Buying a stock at its intrinsic value or lower can give you a relatively higher profit; lower the purchase price, higher the profit and vice versa, provided the selling price remains constant.

While value investors look to buy an undervalued stock, growth investors look at the earning potential of the company. The latter don’t mind buying an overpriced stock, provided it has the potential to grow at a higher rate to justify the high valuations. So it is important first to decide what type of an investor you are and then decide whether to invest or not based on the intrinsic value of a stock .

Here are some financial ratios you can use to determine a stock’s valuation:

P/E ratio: measures the profit per rupee that you can derive by investing in the stock. For a value investor, a lower P/E ratio is more favourable. Note the ideal P/E ratio differs for every sector. So, it would help to compare the stock’s P/E ratio with peers’ or the industry average to get a fair idea about the stock’s valuation.
Return on equity ratio (ROE): measures how efficiently a company generates profit per unit of equity. The higher the ROE, the better it is. However, a company can have a good ROE due to high debt and low equity. So pair this analysis with the company’s debt-to-equity structure.
Debt-to-equity ratio: shows the proportions of equity and debt used by a company to fund its assets. It also suggests whether the company has ample shareholder’s equity to fulfil debt obligations in case the company goes bankrupt. The lower the ratio, the better it is. However, there is no ideal debt-to-equity ratio as it differs across sectors.

Read more on important financial ratios and valuation ratios .

Head on to the ‘Peers’ tab of Tickertape’s Stock Pages to compare select valuation ratios of your desired stock with its peers’.

Analyse the risk

You may have heard a hundred times before that the stock market is risky. And true to its nature, no stock comes with zero risk. It is up to you – how much risk you can take on. So analyse the risks of investing in stock before jumping in. You could ask the following questions:

Is the stock of a small-cap company? If yes, it is probably highly risky for various reasons. Small-cap stocks are new businesses compared to mid and large-caps, which are mature. The latter will have more experience navigating through challenges and market downturns as they would have been in the game for a long. They also tend to be better placed financially compared to small caps.
How prone is the company to change in government policies? If the answer is highly prone, you may want to track how the stock behaves every time the government changes a relevant policy. For instance, housing loan companies are susceptible to RBI’s repo and reverse rate changes. The stock price rises or falls based on how the market reacts to the hike.
Finally, let’s address the elephant in the room – change in the very fundamentals of the company. Such developments can change the narrative altogether and thus impact the business’ growth for years to come. For instance, what if the company appoints a new CEO who wants to change an important aspect of the business model? What if a new, better competitor enters the industry? How well would the company accommodate such changes? Moreover, are you tolerant of such new developments and risks?

Analyse the shareholdings of a stock

Shares of a company are held by not only retail investors but also promoters, domestic and foreign institutional investors, mutual funds , employees and so on. A change in the holdings of such stakeholders reveals their outlook on the company. For instance:

Promoters: as key personnel, promoters of a company have great control over its affairs, directly or indirectly. They have high stakes in the company. Therefore, a decreasing promoter holding trend may be a red flag as it can indicate that promoters themselves are not positive about the prospects of the company.
Institutional and mutual fund holdings: these stakeholders transact stock in bulk. Therefore, a change in their holdings also indicates their outlook for the stock. If you see high buying activity in stock, the big investors are probably positive about the company’s growth. The opposite is also true.

You can visit the ‘ Holdings ’ tab of Tickertape’s Stock Page to view the trend of various types of holdings in a company.

Track the latest news about the company

Finally, keep an eye on the latest developments about the company that is reported in the media. The ‘News’ tab on Tickertape’s Stock Pages collates the latest news about a company.

You would notice that a company having exposure in, say, Russia would have tumbled in response to the war situation. In contrast, defence stocks would gain when the Union Budget announces an increased allocation for the defence sector in India. Likewise, news and developments can impact a stock depending on whether it is positive or negative for the company.

Track your investment to take timely decisions

Investing is not a one-time thing but an ongoing process. Prudent investors don’t invest in a stock and forget about it; they monitor its performance. From time to time, check on how the stock is performing and how the company’s financial performance is evolving. Have the fundamentals changed? Do its future prospects remain intact, or have they gotten better or worsened? Accordingly, you can stay put or consider exiting. This way, you would not only minimise your losses from remaining invested but also free your funds to bet on better avenues.

Now that you have analysed the company on various fronts, it is time to connect the dots and make a meaningful, well-rounded investment decision. So go ahead. But don’t forget that stock analysis is a vast subject, not restricted to the aforementioned pointers. You can add more steps to your analysis if and when required. The goal is to pick fundamentally strong companies that add value to your investment portfolio.

How many types of stock analysis are there?

There are two methods of analysing a stock: 1. Fundamental analysis 2. Technical analysis

What is fundamental analysis?

This type of analysis analyses the company’s fundamentals, such as business segments, management, financials, peers, historical performance, and so on. It also takes into consideration the intrinsic value of stock and the broader economic conditions.

What is technical analysis?

Technical analysis uses the trend in stock price to make conclusions. It believes that historical price movements indicate the future performance of stocks.

How to analyse a stock before investing?

Follow these steps: -Research the industry in which the company is operating -Understand the underlying company, what it does, and how it does it -Study the financial statements of the company -Study the management -Evaluate the prospects of the company -Compare the stocks with their peers -Stock valuation -Analyse the risk -Track the company’s performance

Where can I find information on stocks?

You can find information on stock on the company’s website and in annual reports. Alternatively, you can find company financials for the last 5 yrs on Tickertape’s Stock Pages. Tickertape is a comprehensive investment analysis that offers various tools and features such as Stock Screener , Mutual Fund Screener , Stock Pages, Mutual Fund Pages , Stock Forecast, Stock Deals , and others.

In addition to the financials, Tickertape’s Stock Pages also host a handy investment checklist, key metrics, financial ratios, peer information, corporate actions , and more.

What is the difference between technical analysis and fundamental analysis?

Fundamental analysis takes the fundamental aspects of the company into account, like financial statements, management, industry, economic factors, etc. On the other hand, technical analysis looks at the stock movement and predicts future price movements.

How to find if a stock is undervalued or overvalued?

You can use financial ratios like the Price to Earnings (P/E) ratio, Debt to Equity ratio, Price to Book (P/B) ratio or Return on Equity (ROE) to find out if the stock is undervalued or overvalued.

What is considered a good EPS?

A good EPS depends on the company and the market condition. The higher the EPS, the better its profitability. However, EPS should not be considered a sole parameter while investing in any stock.

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How to Do Market Research: The Complete Guide

Learn how to do market research with this step-by-step guide, complete with templates, tools and real-world examples.

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Get trusted first-party funding data, revenue data and firmographics

What are your customers’ needs? How does your product compare to the competition? What are the emerging trends and opportunities in your industry? If these questions keep you up at night, it’s time to conduct market research.

Market research plays a pivotal role in your ability to stay competitive and relevant, helping you anticipate shifts in consumer behavior and industry dynamics. It involves gathering these insights using a wide range of techniques, from surveys and interviews to data analysis and observational studies.

In this guide, we’ll explore why market research is crucial, the various types of market research, the methods used in data collection, and how to effectively conduct market research to drive informed decision-making and success.

What is market research?

Market research is the systematic process of gathering, analyzing and interpreting information about a specific market or industry. The purpose of market research is to offer valuable insight into the preferences and behaviors of your target audience, and anticipate shifts in market trends and the competitive landscape. This information helps you make data-driven decisions, develop effective strategies for your business, and maximize your chances of long-term growth.

Business intelligence insight graphic with hand showing a lightbulb with $ sign in it

Why is market research important?

By understanding the significance of market research, you can make sure you’re asking the right questions and using the process to your advantage. Some of the benefits of market research include:

Informed decision-making: Market research provides you with the data and insights you need to make smart decisions for your business. It helps you identify opportunities, assess risks and tailor your strategies to meet the demands of the market. Without market research, decisions are often based on assumptions or guesswork, leading to costly mistakes.
Customer-centric approach: A cornerstone of market research involves developing a deep understanding of customer needs and preferences. This gives you valuable insights into your target audience, helping you develop products, services and marketing campaigns that resonate with your customers.
Competitive advantage: By conducting market research, you’ll gain a competitive edge. You’ll be able to identify gaps in the market, analyze competitor strengths and weaknesses, and position your business strategically. This enables you to create unique value propositions, differentiate yourself from competitors, and seize opportunities that others may overlook.
Risk mitigation: Market research helps you anticipate market shifts and potential challenges. By identifying threats early, you can proactively adjust their strategies to mitigate risks and respond effectively to changing circumstances. This proactive approach is particularly valuable in volatile industries.
Resource optimization: Conducting market research allows organizations to allocate their time, money and resources more efficiently. It ensures that investments are made in areas with the highest potential return on investment, reducing wasted resources and improving overall business performance.
Adaptation to market trends: Markets evolve rapidly, driven by technological advancements, cultural shifts and changing consumer attitudes. Market research ensures that you stay ahead of these trends and adapt your offerings accordingly so you can avoid becoming obsolete.

As you can see, market research empowers businesses to make data-driven decisions, cater to customer needs, outperform competitors, mitigate risks, optimize resources and stay agile in a dynamic marketplace. These benefits make it a huge industry; the global market research services market is expected to grow from $76.37 billion in 2021 to $108.57 billion in 2026 . Now, let’s dig into the different types of market research that can help you achieve these benefits.

Types of market research

Qualitative research
Quantitative research
Exploratory research
Descriptive research
Causal research
Cross-sectional research
Longitudinal research

Despite its advantages, 23% of organizations don’t have a clear market research strategy. Part of developing a strategy involves choosing the right type of market research for your business goals. The most commonly used approaches include:

1. Qualitative research

Qualitative research focuses on understanding the underlying motivations, attitudes and perceptions of individuals or groups. It is typically conducted through techniques like in-depth interviews, focus groups and content analysis — methods we’ll discuss further in the sections below. Qualitative research provides rich, nuanced insights that can inform product development, marketing strategies and brand positioning.

2. Quantitative research

Quantitative research, in contrast to qualitative research, involves the collection and analysis of numerical data, often through surveys, experiments and structured questionnaires. This approach allows for statistical analysis and the measurement of trends, making it suitable for large-scale market studies and hypothesis testing. While it’s worthwhile using a mix of qualitative and quantitative research, most businesses prioritize the latter because it is scientific, measurable and easily replicated across different experiments.

3. Exploratory research

Whether you’re conducting qualitative or quantitative research or a mix of both, exploratory research is often the first step. Its primary goal is to help you understand a market or problem so you can gain insights and identify potential issues or opportunities. This type of market research is less structured and is typically conducted through open-ended interviews, focus groups or secondary data analysis. Exploratory research is valuable when entering new markets or exploring new product ideas.

4. Descriptive research

As its name implies, descriptive research seeks to describe a market, population or phenomenon in detail. It involves collecting and summarizing data to answer questions about audience demographics and behaviors, market size, and current trends. Surveys, observational studies and content analysis are common methods used in descriptive research.

5. Causal research

Causal research aims to establish cause-and-effect relationships between variables. It investigates whether changes in one variable result in changes in another. Experimental designs, A/B testing and regression analysis are common causal research methods. This sheds light on how specific marketing strategies or product changes impact consumer behavior.

6. Cross-sectional research

Cross-sectional market research involves collecting data from a sample of the population at a single point in time. It is used to analyze differences, relationships or trends among various groups within a population. Cross-sectional studies are helpful for market segmentation, identifying target audiences and assessing market trends at a specific moment.

7. Longitudinal research

Longitudinal research, in contrast to cross-sectional research, collects data from the same subjects over an extended period. This allows for the analysis of trends, changes and developments over time. Longitudinal studies are useful for tracking long-term developments in consumer preferences, brand loyalty and market dynamics.

Each type of market research has its strengths and weaknesses, and the method you choose depends on your specific research goals and the depth of understanding you’re aiming to achieve. In the following sections, we’ll delve into primary and secondary research approaches and specific research methods.

Primary vs. secondary market research

Market research of all types can be broadly categorized into two main approaches: primary research and secondary research. By understanding the differences between these approaches, you can better determine the most appropriate research method for your specific goals.

Primary market research

Primary research involves the collection of original data straight from the source. Typically, this involves communicating directly with your target audience — through surveys, interviews, focus groups and more — to gather information. Here are some key attributes of primary market research:

Customized data: Primary research provides data that is tailored to your research needs. You design a custom research study and gather information specific to your goals.
Up-to-date insights: Because primary research involves communicating with customers, the data you collect reflects the most current market conditions and consumer behaviors.
Time-consuming and resource-intensive: Despite its advantages, primary research can be labor-intensive and costly, especially when dealing with large sample sizes or complex study designs. Whether you hire a market research consultant, agency or use an in-house team, primary research studies consume a large amount of resources and time.

Secondary market research

Secondary research, on the other hand, involves analyzing data that has already been compiled by third-party sources, such as online research tools, databases, news sites, industry reports and academic studies.

Here are the main characteristics of secondary market research:

Cost-effective: Secondary research is generally more cost-effective than primary research since it doesn’t require building a research plan from scratch. You and your team can look at databases, websites and publications on an ongoing basis, without needing to design a custom experiment or hire a consultant.
Leverages multiple sources: Data tools and software extract data from multiple places across the web, and then consolidate that information within a single platform. This means you’ll get a greater amount of data and a wider scope from secondary research.
Quick to access: You can access a wide range of information rapidly — often in seconds — if you’re using online research tools and databases. Because of this, you can act on insights sooner, rather than taking the time to develop an experiment.

So, when should you use primary vs. secondary research? In practice, many market research projects incorporate both primary and secondary research to take advantage of the strengths of each approach.

One rule of thumb is to focus on secondary research to obtain background information, market trends or industry benchmarks. It is especially valuable for conducting preliminary research, competitor analysis, or when time and budget constraints are tight. Then, if you still have knowledge gaps or need to answer specific questions unique to your business model, use primary research to create a custom experiment.

Market research methods

Surveys and questionnaires
Focus groups
Observational research
Online research tools
Experiments
Content analysis
Ethnographic research

How do primary and secondary research approaches translate into specific research methods? Let’s take a look at the different ways you can gather data:

1. Surveys and questionnaires

Surveys and questionnaires are popular methods for collecting structured data from a large number of respondents. They involve a set of predetermined questions that participants answer. Surveys can be conducted through various channels, including online tools, telephone interviews and in-person or online questionnaires. They are useful for gathering quantitative data and assessing customer demographics, opinions, preferences and needs. On average, customer surveys have a 33% response rate , so keep that in mind as you consider your sample size.

2. Interviews

Interviews are in-depth conversations with individuals or groups to gather qualitative insights. They can be structured (with predefined questions) or unstructured (with open-ended discussions). Interviews are valuable for exploring complex topics, uncovering motivations and obtaining detailed feedback.

3. Focus groups

The most common primary research methods are in-depth webcam interviews and focus groups. Focus groups are a small gathering of participants who discuss a specific topic or product under the guidance of a moderator. These discussions are valuable for primary market research because they reveal insights into consumer attitudes, perceptions and emotions. Focus groups are especially useful for idea generation, concept testing and understanding group dynamics within your target audience.

4. Observational research

Observational research involves observing and recording participant behavior in a natural setting. This method is particularly valuable when studying consumer behavior in physical spaces, such as retail stores or public places. In some types of observational research, participants are aware you’re watching them; in other cases, you discreetly watch consumers without their knowledge, as they use your product. Either way, observational research provides firsthand insights into how people interact with products or environments.

5. Online research tools

You and your team can do your own secondary market research using online tools. These tools include data prospecting platforms and databases, as well as online surveys, social media listening, web analytics and sentiment analysis platforms. They help you gather data from online sources, monitor industry trends, track competitors, understand consumer preferences and keep tabs on online behavior. We’ll talk more about choosing the right market research tools in the sections that follow.

6. Experiments

Market research experiments are controlled tests of variables to determine causal relationships. While experiments are often associated with scientific research, they are also used in market research to assess the impact of specific marketing strategies, product features, or pricing and packaging changes.

7. Content analysis

Content analysis involves the systematic examination of textual, visual or audio content to identify patterns, themes and trends. It’s commonly applied to customer reviews, social media posts and other forms of online content to analyze consumer opinions and sentiments.

8. Ethnographic research

Ethnographic research immerses researchers into the daily lives of consumers to understand their behavior and culture. This method is particularly valuable when studying niche markets or exploring the cultural context of consumer choices.

How to do market research

Set clear objectives
Identify your target audience
Choose your research methods
Use the right market research tools
Collect data
Analyze data
Interpret your findings
Identify opportunities and challenges
Make informed business decisions
Monitor and adapt

Now that you have gained insights into the various market research methods at your disposal, let’s delve into the practical aspects of how to conduct market research effectively. Here’s a quick step-by-step overview, from defining objectives to monitoring market shifts.

1. Set clear objectives

When you set clear and specific goals, you’re essentially creating a compass to guide your research questions and methodology. Start by precisely defining what you want to achieve. Are you launching a new product and want to understand its viability in the market? Are you evaluating customer satisfaction with a product redesign?

Start by creating SMART goals — objectives that are specific, measurable, achievable, relevant and time-bound. Not only will this clarify your research focus from the outset, but it will also help you track progress and benchmark your success throughout the process.

You should also consult with key stakeholders and team members to ensure alignment on your research objectives before diving into data collecting. This will help you gain diverse perspectives and insights that will shape your research approach.

2. Identify your target audience

Next, you’ll need to pinpoint your target audience to determine who should be included in your research. Begin by creating detailed buyer personas or stakeholder profiles. Consider demographic factors like age, gender, income and location, but also delve into psychographics, such as interests, values and pain points.

The more specific your target audience, the more accurate and actionable your research will be. Additionally, segment your audience if your research objectives involve studying different groups, such as current customers and potential leads.

If you already have existing customers, you can also hold conversations with them to better understand your target market. From there, you can refine your buyer personas and tailor your research methods accordingly.

3. Choose your research methods

Selecting the right research methods is crucial for gathering high-quality data. Start by considering the nature of your research objectives. If you’re exploring consumer preferences, surveys and interviews can provide valuable insights. For in-depth understanding, focus groups or observational research might be suitable. Consider using a mix of quantitative and qualitative methods to gain a well-rounded perspective.

You’ll also need to consider your budget. Think about what you can realistically achieve using the time and resources available to you. If you have a fairly generous budget, you may want to try a mix of primary and secondary research approaches. If you’re doing market research for a startup , on the other hand, chances are your budget is somewhat limited. If that’s the case, try addressing your goals with secondary research tools before investing time and effort in a primary research study.

4. Use the right market research tools

Whether you’re conducting primary or secondary research, you’ll need to choose the right tools. These can help you do anything from sending surveys to customers to monitoring trends and analyzing data. Here are some examples of popular market research tools:

Market research software: Crunchbase is a platform that provides best-in-class company data, making it valuable for market research on growing companies and industries. You can use Crunchbase to access trusted, first-party funding data, revenue data, news and firmographics, enabling you to monitor industry trends and understand customer needs.

Survey and questionnaire tools: SurveyMonkey is a widely used online survey platform that allows you to create, distribute and analyze surveys. Google Forms is a free tool that lets you create surveys and collect responses through Google Drive.
Data analysis software: Microsoft Excel and Google Sheets are useful for conducting statistical analyses. SPSS is a powerful statistical analysis software used for data processing, analysis and reporting.
Social listening tools: Brandwatch is a social listening and analytics platform that helps you monitor social media conversations, track sentiment and analyze trends. Mention is a media monitoring tool that allows you to track mentions of your brand, competitors and keywords across various online sources.
Data visualization platforms: Tableau is a data visualization tool that helps you create interactive and shareable dashboards and reports. Power BI by Microsoft is a business analytics tool for creating interactive visualizations and reports.

5. Collect data

There’s an infinite amount of data you could be collecting using these tools, so you’ll need to be intentional about going after the data that aligns with your research goals. Implement your chosen research methods, whether it’s distributing surveys, conducting interviews or pulling from secondary research platforms. Pay close attention to data quality and accuracy, and stick to a standardized process to streamline data capture and reduce errors.

6. Analyze data

Once data is collected, you’ll need to analyze it systematically. Use statistical software or analysis tools to identify patterns, trends and correlations. For qualitative data, employ thematic analysis to extract common themes and insights. Visualize your findings with charts, graphs and tables to make complex data more understandable.

If you’re not proficient in data analysis, consider outsourcing or collaborating with a data analyst who can assist in processing and interpreting your data accurately.

7. Interpret your findings

Interpreting your market research findings involves understanding what the data means in the context of your objectives. Are there significant trends that uncover the answers to your initial research questions? Consider the implications of your findings on your business strategy. It’s essential to move beyond raw data and extract actionable insights that inform decision-making.

Hold a cross-functional meeting or workshop with relevant team members to collectively interpret the findings. Different perspectives can lead to more comprehensive insights and innovative solutions.

8. Identify opportunities and challenges

Use your research findings to identify potential growth opportunities and challenges within your market. What segments of your audience are underserved or overlooked? Are there emerging trends you can capitalize on? Conversely, what obstacles or competitors could hinder your progress?

Lay out this information in a clear and organized way by conducting a SWOT analysis, which stands for strengths, weaknesses, opportunities and threats. Jot down notes for each of these areas to provide a structured overview of gaps and hurdles in the market.

9. Make informed business decisions

Market research is only valuable if it leads to informed decisions for your company. Based on your insights, devise actionable strategies and initiatives that align with your research objectives. Whether it’s refining your product, targeting new customer segments or adjusting pricing, ensure your decisions are rooted in the data.

At this point, it’s also crucial to keep your team aligned and accountable. Create an action plan that outlines specific steps, responsibilities and timelines for implementing the recommendations derived from your research.

10. Monitor and adapt

Market research isn’t a one-time activity; it’s an ongoing process. Continuously monitor market conditions, customer behaviors and industry trends. Set up mechanisms to collect real-time data and feedback. As you gather new information, be prepared to adapt your strategies and tactics accordingly. Regularly revisiting your research ensures your business remains agile and reflects changing market dynamics and consumer preferences.

Online market research sources

As you go through the steps above, you’ll want to turn to trusted, reputable sources to gather your data. Here’s a list to get you started:

Crunchbase: As mentioned above, Crunchbase is an online platform with an extensive dataset, allowing you to access in-depth insights on market trends, consumer behavior and competitive analysis. You can also customize your search options to tailor your research to specific industries, geographic regions or customer personas.

Product Image Advanced Search CRMConnected

Academic databases: Academic databases, such as ProQuest and JSTOR , are treasure troves of scholarly research papers, studies and academic journals. They offer in-depth analyses of various subjects, including market trends, consumer preferences and industry-specific insights. Researchers can access a wealth of peer-reviewed publications to gain a deeper understanding of their research topics.
Government and NGO databases: Government agencies, nongovernmental organizations and other institutions frequently maintain databases containing valuable economic, demographic and industry-related data. These sources offer credible statistics and reports on a wide range of topics, making them essential for market researchers. Examples include the U.S. Census Bureau , the Bureau of Labor Statistics and the Pew Research Center .
Industry reports: Industry reports and market studies are comprehensive documents prepared by research firms, industry associations and consulting companies. They provide in-depth insights into specific markets, including market size, trends, competitive analysis and consumer behavior. You can find this information by looking at relevant industry association databases; examples include the American Marketing Association and the National Retail Federation .
Social media and online communities: Social media platforms like LinkedIn or Twitter (X) , forums such as Reddit and Quora , and review platforms such as G2 can provide real-time insights into consumer sentiment, opinions and trends.

Market research examples

At this point, you have market research tools and data sources — but how do you act on the data you gather? Let’s go over some real-world examples that illustrate the practical application of market research across various industries. These examples showcase how market research can lead to smart decision-making and successful business decisions.

Example 1: Apple’s iPhone launch

Apple ’s iconic iPhone launch in 2007 serves as a prime example of market research driving product innovation in tech. Before the iPhone’s release, Apple conducted extensive market research to understand consumer preferences, pain points and unmet needs in the mobile phone industry. This research led to the development of a touchscreen smartphone with a user-friendly interface, addressing consumer demands for a more intuitive and versatile device. The result was a revolutionary product that disrupted the market and redefined the smartphone industry.

Example 2: McDonald’s global expansion

McDonald’s successful global expansion strategy demonstrates the importance of market research when expanding into new territories. Before entering a new market, McDonald’s conducts thorough research to understand local tastes, preferences and cultural nuances. This research informs menu customization, marketing strategies and store design. For instance, in India, McDonald’s offers a menu tailored to local preferences, including vegetarian options. This market-specific approach has enabled McDonald’s to adapt and thrive in diverse global markets.

Example 3: Organic and sustainable farming

The shift toward organic and sustainable farming practices in the food industry is driven by market research that indicates increased consumer demand for healthier and environmentally friendly food options. As a result, food producers and retailers invest in sustainable sourcing and organic product lines — such as with these sustainable seafood startups — to align with this shift in consumer values.

The bottom line? Market research has multiple use cases and is a critical practice for any industry. Whether it’s launching groundbreaking products, entering new markets or responding to changing consumer preferences, you can use market research to shape successful strategies and outcomes.

Market research templates

You finally have a strong understanding of how to do market research and apply it in the real world. Before we wrap up, here are some market research templates that you can use as a starting point for your projects:

Smartsheet competitive analysis templates : These spreadsheets can serve as a framework for gathering information about the competitive landscape and obtaining valuable lessons to apply to your business strategy.
SurveyMonkey product survey template : Customize the questions on this survey based on what you want to learn from your target customers.
HubSpot templates : HubSpot offers a wide range of free templates you can use for market research, business planning and more.
SCORE templates : SCORE is a nonprofit organization that provides templates for business plans, market analysis and financial projections.
SBA.gov : The U.S. Small Business Administration offers templates for every aspect of your business, including market research, and is particularly valuable for new startups.

Strengthen your business with market research

When conducted effectively, market research is like a guiding star. Equipped with the right tools and techniques, you can uncover valuable insights, stay competitive, foster innovation and navigate the complexities of your industry.

Throughout this guide, we’ve discussed the definition of market research, different research methods, and how to conduct it effectively. We’ve also explored various types of market research and shared practical insights and templates for getting started.

Now, it’s time to start the research process. Trust in data, listen to the market and make informed decisions that guide your company toward lasting success.

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How to do market research: The complete guide for your brand

Written by by Jacqueline Zote

Published on April 13, 2023

Reading time 10 minutes

Blindly putting out content or products and hoping for the best is a thing of the past. Not only is it a waste of time and energy, but you’re wasting valuable marketing dollars in the process. Now you have a wealth of tools and data at your disposal, allowing you to develop data-driven marketing strategies . That’s where market research comes in, allowing you to uncover valuable insights to inform your business decisions.

Conducting market research not only helps you better understand how to sell to customers but also stand out from your competition. In this guide, we break down everything you need to know about market research and how doing your homework can help you grow your business.

Table of contents:

What is market research?

Why is market research important, types of market research, where to conduct market research.

Steps for conducting market research
Tools to use for market research

Market research is the process of gathering information surrounding your business opportunities. It identifies key information to better understand your audience. This includes insights related to customer personas and even trends shaping your industry.

Taking time out of your schedule to conduct research is crucial for your brand health. Here are some of the key benefits of market research:

Understand your customers’ motivations and pain points

Most marketers are out of touch with what their customers want. Moreover, these marketers are missing key information on what products their audience wants to buy.

Simply put, you can’t run a business if you don’t know what motivates your customers.

And spoiler alert: Your customers’ wants and needs change. Your customers’ behaviors today might be night and day from what they were a few years ago.

Market research holds the key to understanding your customers better. It helps you uncover their key pain points and motivations and understand how they shape their interests and behavior.

Figure out how to position your brand

Positioning is becoming increasingly important as more and more brands enter the marketplace. Market research enables you to spot opportunities to define yourself against your competitors.

Maybe you’re able to emphasize a lower price point. Perhaps your product has a feature that’s one of a kind. Finding those opportunities goes hand in hand with researching your market.

Maintain a strong pulse on your industry at large

Today’s marketing world evolves at a rate that’s difficult to keep up with.

Fresh products. Up-and-coming brands. New marketing tools. Consumers get bombarded with sales messages from all angles. This can be confusing and overwhelming.

By monitoring market trends, you can figure out the best tactics for reaching your target audience.

Not everyone conducts market research for the same reason. While some may want to understand their audience better, others may want to see how their competitors are doing. As such, there are different types of market research you can conduct depending on your goal.

Interview-based market research allows for one-on-one interactions. This helps the conversation to flow naturally, making it easier to add context. Whether this takes place in person or virtually, it enables you to gather more in-depth qualitative data.

Buyer persona research

Buyer persona research lets you take a closer look at the people who make up your target audience. You can discover the needs, challenges and pain points of each buyer persona to understand what they need from your business. This will then allow you to craft products or campaigns to resonate better with each persona.

Pricing research

In this type of research, brands compare similar products or services with a particular focus on pricing. They look at how much those products or services typically sell for so they can get more competitive with their pricing strategy.

Competitive analysis research

Competitor analysis gives you a realistic understanding of where you stand in the market and how your competitors are doing. You can use this analysis to find out what’s working in your industry and which competitors to watch out for. It even gives you an idea of how well those competitors are meeting consumer needs.

Depending on the competitor analysis tool you use, you can get as granular as you need with your research. For instance, Sprout Social lets you analyze your competitors’ social strategies. You can see what types of content they’re posting and even benchmark your growth against theirs.

Dashboard showing Facebook competitors report on Sprout Social

Brand awareness research

Conducting brand awareness research allows you to assess your brand’s standing in the market. It tells you how well-known your brand is among your target audience and what they associate with it. This can help you gauge people’s sentiments toward your brand and whether you need to rebrand or reposition.

If you don’t know where to start with your research, you’re in the right place.

There’s no shortage of market research methods out there. In this section, we’ve highlighted research channels for small and big businesses alike.

Considering that Google sees a staggering 8.5 billion searches each day, there’s perhaps no better place to start.

A quick Google search is a potential goldmine for all sorts of questions to kick off your market research. Who’s ranking for keywords related to your industry? Which products and pieces of content are the hottest right now? Who’s running ads related to your business?

For example, Google Product Listing Ads can help highlight all of the above for B2C brands.

row of product listing ads on Google for the search term "baby carrier"

The same applies to B2B brands looking to keep tabs on who’s running industry-related ads and ranking for keyword terms too.

list of sponsored results for the search term "email marketing tool"

There’s no denying that email represents both an aggressive and effective marketing channel for marketers today. Case in point, 44% of online shoppers consider email as the most influential channel in their buying decisions.

Looking through industry and competitor emails is a brilliant way to learn more about your market. For example, what types of offers and deals are your competitors running? How often are they sending emails?

list of promotional emails from different companies including ASOS and Dropbox

Email is also invaluable for gathering information directly from your customers. This survey message from Asana is a great example of how to pick your customers’ brains to figure out how you can improve your quality of service.

email from asana asking users to take a survey

Industry journals, reports and blogs

Don’t neglect the importance of big-picture market research when it comes to tactics and marketing channels to explore. Look to marketing resources such as reports and blogs as well as industry journals

Keeping your ear to the ground on new trends and technologies is a smart move for any business. Sites such as Statista, Marketing Charts, AdWeek and Emarketer are treasure troves of up-to-date data and news for marketers.

And of course, there’s the Sprout Insights blog . And invaluable resources like The Sprout Social Index™ can keep you updated on the latest social trends.

Social media

If you want to learn more about your target market, look no further than social media. Social offers a place to discover what your customers want to see in future products or which brands are killin’ it. In fact, social media is become more important for businesses than ever with the level of data available.

It represents a massive repository of real-time data and insights that are instantly accessible. Brand monitoring and social listening are effective ways to conduct social media research . You can even be more direct with your approach. Ask questions directly or even poll your audience to understand their needs and preferences.

The 5 steps for how to do market research

Now that we’ve covered the why and where, it’s time to get into the practical aspects of market research. Here are five essential steps on how to do market research effectively.

Step 1: Identify your research topic

First off, what are you researching about? What do you want to find out? Narrow down on a specific research topic so you can start with a clear idea of what to look for.

For example, you may want to learn more about how well your product features are satisfying the needs of existing users. This might potentially lead to feature updates and improvements. Or it might even result in new feature introductions.

Similarly, your research topic may be related to your product or service launch or customer experience. Or you may want to conduct research for an upcoming marketing campaign.

Step 2: Choose a buyer persona to engage

If you’re planning to focus your research on a specific type of audience, decide which buyer persona you want to engage. This persona group will serve as a representative sample of your target audience.

Engaging a specific group of audience lets you streamline your research efforts. As such, it can be a much more effective and organized approach than researching thousands (if not millions) of individuals.

You may be directing your research toward existing users of your product. To get even more granular, you may want to focus on users who have been familiar with the product for at least a year, for example.

Step 3: Start collecting data

The next step is one of the most critical as it involves collecting the data you need for your research. Before you begin, make sure you’ve chosen the right research methods that will uncover the type of data you need. This largely depends on your research topic and goals.

Remember that you don’t necessarily have to stick to one research method. You may use a combination of qualitative and quantitative approaches. So for example, you could use interviews to supplement the data from your surveys. Or you may stick to insights from your social listening efforts.

To keep things consistent, let’s look at this in the context of the example from earlier. Perhaps you can send out a survey to your existing users asking them a bunch of questions. This might include questions like which features they use the most and how often they use them. You can get them to choose an answer from one to five and collect quantitative data.

Plus, for qualitative insights, you could even include a few open-ended questions with the option to write their answers. For instance, you might ask them if there’s any improvement they wish to see in your product.

Step 4: Analyze results

Once you have all the data you need, it’s time to analyze it keeping your research topic in mind. This involves trying to interpret the data to look for a wider meaning, particularly in relation to your research goal.

So let’s say a large percentage of responses were four or five in the satisfaction rating. This means your existing users are mostly satisfied with your current product features. On the other hand, if the responses were mostly ones and twos, you may look for opportunities to improve. The responses to your open-ended questions can give you further context as to why people are disappointed.

Step 5: Make decisions for your business

Now it’s time to take your findings and turn them into actionable insights for your business. In this final step, you need to decide how you want to move forward with your new market insight.

What did you find in your research that would require action? How can you put those findings to good use?

The market research tools you should be using

To wrap things up, let’s talk about the various tools available to conduct speedy, in-depth market research. These tools are essential for conducting market research faster and more efficiently.

Social listening and analytics

Social analytics tools like Sprout can help you keep track of engagement across social media. This goes beyond your own engagement data but also includes that of your competitors. Considering how quickly social media moves, using a third-party analytics tool is ideal. It allows you to make sense of your social data at a glance and ensure that you’re never missing out on important trends.

Email marketing research tools

Keeping track of brand emails is a good idea for any brand looking to stand out in its audience’s inbox.

Tools such as MailCharts , Really Good Emails and Milled can show you how different brands run their email campaigns.

Meanwhile, tools like Owletter allow you to monitor metrics such as frequency and send-timing. These metrics can help you understand email marketing strategies among competing brands.

Content marketing research

If you’re looking to conduct research on content marketing, tools such as BuzzSumo can be of great help. This tool shows you the top-performing industry content based on keywords. Here you can see relevant industry sites and influencers as well as which brands in your industry are scoring the most buzz. It shows you exactly which pieces of content are ranking well in terms of engagements and shares and on which social networks.

SEO and keyword tracking

Monitoring industry keywords is a great way to uncover competitors. It can also help you discover opportunities to advertise your products via organic search. Tools such as Ahrefs provide a comprehensive keyword report to help you see how your search efforts stack up against the competition.

organic traffic and keywords report on ahrefs

Competitor comparison template

For the sake of organizing your market research, consider creating a competitive matrix. The idea is to highlight how you stack up side-by-side against others in your market. Use a social media competitive analysis template to track your competitors’ social presence. That way, you can easily compare tactics, messaging and performance. Once you understand your strengths and weaknesses next to your competitors, you’ll find opportunities as well.

Customer persona creator

Finally, customer personas represent a place where all of your market research comes together. You’d need to create a profile of your ideal customer that you can easily refer to. Tools like Xtensio can help in outlining your customer motivations and demographics as you zero in on your target market.

user persona example template on xtensio

Build a solid market research strategy

Having a deeper understanding of the market gives you leverage in a sea of competitors. Use the steps and market research tools we shared above to build an effective market research strategy.

But keep in mind that the accuracy of your research findings depends on the quality of data collected. Turn to Sprout’s social media analytics tools to uncover heaps of high-quality data across social networks.

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What Does Nvidia’s Stock Split Mean for Investors?

The semiconductor giant’s stock will carry a fair value estimate of $105 after its 10-for-1 split.

Semiconductor firm Nvidia NVDA announced a 10-for-1 stock split along with its blowout first-quarter earnings results on Wednesday. The stock split means investors will receive nine additional shares for each one they already own.

“The split is reasonable since the stock price has appreciated so significantly,” says Morningstar technology equity strategist Brian Colello .

Nvidia shares are up more than 90% this year and more than 200% over the past 12 months, as the company has boomed thanks to the key role its semiconductor chips play in training and running artificial intelligence models. It now trades at over $1,000 per share, while it went for $495 at the end of 2023. The stock was changing hands near $305 per share in May 2023, just before the firm reported blowout earnings that kicked off the AI stock frenzy.

The firm’s last stock split was in July 2021, when it issued three new shares for every one outstanding (a four-for-one split).

The Date for Nvidia’s Stock Split

According to the company’s press release , the split is slated to occur after the stock market’s close on June 7. Shares will trade on a post-split basis starting June 10.

Nvidia Stock Price

Colello raised his fair value estimate for Nvidia stock from $910 to $1,050 following the company’s first-quarter results, which saw revenue of $26 billion—an 18% increase over the previous quarter and a 262% increase over the year-ago quarter.

What Nvidia’s Stock Split Means

While the split will increase the number of outstanding shares in circulation, it will not change the company’s overall value or affect Morningstar’s view of its stock. “Splitting the stock shouldn’t create economic value in theory, but it will make the company more accessible to smaller investors,” Colello explains. While $500 isn’t enough to buy a single share of Nvidia today, he explains, it will be enough to buy several shares after the split.

After the split, Nvidia’s fair value estimate will be adjusted to $105. The firm’s wide economic moat rating will be unaffected, as will its 3-star rating (meaning the stock is considered fairly valued) and very high uncertainty rating.

Nvidia’s AI Boom

The firm’s first-quarter earnings show it “remains the clear winner in the race to build out generative artificial intelligence capabilities,” Colello writes. “We’re encouraged by management’s commentary that demand for its upcoming Blackwell products should exceed supply into calendar 2025, and we see no signs of AI demand slowing either.”

Colello is looking ahead to strong revenue growth from data centers over the next several quarters, and he expects additional growth from a higher installed base of AI equipment. He is anticipating revenue of $29.7 billion in the next quarter—slightly more than Nvidia’s estimate.

Colello doesn’t believe the rush of companies buying Nvidia’s chips will stall—for now, at least. He says the firm’s production is still well-matched to customer demand, though the risk bears watching. “Given Nvidia’s astronomical growth, we continue to assess the risk of companies buying too many AI GPUs too soon, leading to an air pocket and excess inventory at some point in the future. We see no such signs today,” he writes.

Why Do Companies Split Their Stock?

When a company splits its stock, each share gets divided into multiple new shares. While this increases the number of outstanding shares, it does not change the company’s overall value (its market capitalization). Firms tend to do this when their share price has risen dramatically to an amount that might make it difficult for individual investors to purchase them. Having a larger number of cheaper shares to attract more buyers can help improve liquidity, and lower prices can also have the psychological impact of making shares look more attractive to investors, even though the company’s underlying value hasn’t changed.

Other Recent Stock Splits

Nvidia isn’t the only major company to split its shares in recent years. Retail giant Walmart WMT enacted a 3-for-1 split in February, while Alphabet GOOGL / GOOG , Tesla TSLA , and Amazon AMZN split shares in 2022.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies .

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April pce index forecasts show inflation remaining sticky, ai is booming, but consumer spending is slowing. which will prevail in the stock market, why stocks are hitting record highs—and what could send them back to earth, why immigration has boosted job gains and the economy, 5 things we learned from the q1 earnings season, today’s market volatility could provide tomorrow’s opportunities, for bond investors, delayed rate cuts demand a different playbook, what’s going on with apple, tesla, and alphabet, what’s the difference between the cpi and pce indexes, sponsor center.

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Do Options Traders Know Something About Humana (HUM) Stock We Don't?

Investors in Humana Inc. ( HUM Quick Quote HUM - Free Report ) need to pay close attention to the stock based on moves in the options market lately. That is because the Jun 21, 2024 $220 Call had some of the highest implied volatility of all equity options today.

What is Implied Volatility?

Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.

What do the Analysts Think?

Clearly, options traders are pricing in a big move for Humana shares, but what is the fundamental picture for the company? Currently, Humana is a Zacks Rank #3 (Hold) in the Medical – HMOs industry that ranks in the Top 27% of our Zacks Industry Rank. Over the last 60 days, three analysts have increased their earnings estimates for the current quarter, while four analysts have revised their estimates downward. The net effect has taken our Zacks Consensus Estimate for the current quarter from $6.01 per share to $5.89 in that period. Given the way analysts feel about Humana right now, this huge implied volatility could mean there’s a trade developing. Oftentimes, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.

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Trump lashes out at robert de niro after actor calls him a ‘tyrant’ outside courthouse, trump trial prosecutor ends closing argument after nearly 5 hours jury instructions set for wednesday, special dividend #1: we sold something for a lot of money.

One common reason to announce a special dividend is a one-time influx of cash earned from selling off part of the company, or unloading a significant part (or all) of a large stake in another firm.

As a for-instance, HSBC Holdings (HSBC) , which pays regular dividends, too, announced in early April that it would pay a 21-cent-per-share special dividend. That special dividend was directly tied to the sale of HSBC Bank Canada to Royal Bank of Canada (RY) , which the company says delivered an estimated gain on sale of $4.9 billion. It’s “only” worth about a half a point in annual yield—but it’s still extra cash shareholders weren’t planning on.

Special Dividend #2: Sharing Excess Profit/Cash

In mid-December 2023, Costco (COST) made an enormous splash by announcing a $15-per-share dividend. Costco had just delivered a Street-beating profit for its fiscal first quarter, but the likely driver behind the dividend was Costco’s cash hoard, which reached $17 billion. Every few years or so, when Costco’s cash pile stacks high enough, it doles out a special dividend. It did so in 2012, 2015, 2017, and 2020.

Costco’s special dividend added roughly 2% worth of annual yield, which was warmly received by investors who currently earn less than 1% on the regular.

Special Dividend #3: The Totally Normal Special Dividend

Most company directors know just how much shareholders want regular, dependable dividends. But what if the company is cyclical, or highly dependent on commodity prices, or just simply has unpredictable profits from one year to the next?

Some firms in this position have tried to deliver steady, generous dividends nonetheless, only to get kneecapped by a few lousy quarters. The solution? A dividend cut, or even a dividend suspension.

But a few crafty boards have mastered their situation. Rather than writing checks their cash flow can’t cash, they use a “hybrid” dividend program—one where they deliver a maintainable level of regular dividends, then routinely “top up” the payout via special dividends as their profits allow.

These are the dividend payers that give mainstream data sites fits! Their superior yields go completely unnoticed—except to investors willing to do the extra research.

Let me show you what I mean with a few dividend payers with “hidden” yields of up to 16%.

Dillard’s (DDS)

Listed Dividend Yield: 0.2%

Dividend Yield With Specials: 4.6%

Department store Dillard’s (DDS) offers up an almost negligible regular dividend of a quarter per share, which translates to a meager 0.2% yield—exactly what we’d imagine out of a stodgy old mall retailer.

Except over the past few years, Dillard’s has been anything but.

DDS Total Returns

While many brick-and-mortar retailers were crippled by the pandemic, Dillard’s was refined by it. While revenues are virtually the same as they were a year ago, the company pulled some familiar levers like slashing hours and closing a few stores. But it also became much savvier about inventory management, leading to less discounting, which has resulted in fatter margins and better cash generation. Dillard’s has spent that cutting into its debt and building up its reserves.

And despite what the headline yield might indicate, Dillard’s also shares the wealth. It has aggressively bought back shares for years, but post-COVID, it has also started doling out massive special dividends—$15 per share at the end of 2021 and the start of 2023, then $20 to kick off 2024. That’s worth 4.4% in annual yield, taking Dillard’s from meaningless income to several times better than the market average.

It’s difficult to tell how long Dillard’s can keep up both its oversized returns and super-sized special dividends, so there’s no relying on it long-term for meaningful income. But management clearly has shareholders’ best interests at heart.

National Presto Industries (NPK)

Listed Dividend Yield: 1.3%

Dividend Yield With Specials: 5.6%

National Presto Industries (NPK) is a wide-ranging conglomerate. It’s best known for its small kitchen appliances—slow cookers, vacuum sealers, pressure canners, popcorn poppers and the like.

But that’s not its biggest business. NPK’s largest source of both sales and profits is its defense division, which produces ammunition, cartridge cases, precision metal parts for defense and aerospace, primarily through Defense Department contracts. It also has a safety division that provides things like fire extinguishers and carbon monoxide detectors.

It’s an odd bird, as far as dividends are concerned—and it’s not just the specials.

NPK pays a regular annual dividend that has been fixed at a buck a share for years. That’s good for a little more than 1% in yield; right around S&P 500 levels. But it also pays a special dividend, typically in March, and has so pretty dependably for over a decade.

Again, the regular payout is too low for anyone who needs to meticulously plan out an income calendar . But with the specials, NPK has been good for about 4% to 7% in annual yield for years now.

Haverty Furniture (HVT)

Listed Dividend Yield: 4.3%

Dividend Yield With Specials: 7.7%

Haverty Furniture is an upscale furniture retailer that operates 124 showrooms in 17 states, primarily in the South and Midwest.

The company was largely growing heading into the COVID pandemic, and then it got on the same roller coaster housing stocks in general have ridden since. After a brief initial dip, America’s housing market boomed, pushing gains in homebuilders and housing-adjacent stocks alike for a couple of years. However, over the past year or so, as the Federal Reserve has rapidly lifted its benchmark rate, new- and existing-home sales alike have plunged—no sweat off the brow of homebuilders, but misery for furniture firms like HVT.

Haverty’s dividend situation is the opposite of most. The annual special cash dividend is the longstanding tradition, having been paid since 1935; the quarterly payouts only began in 2008.

Perhaps more interesting to people considering HVT over the longer-term is the growth in the quarterly pat, which has more than doubled since 2017 to its current 32 cents per share. With a “typical” dollar-per-share special, that combines for a nearly 8% yield at current prices.

CVR Energy (CVI)

Listed Dividend Yield: 6.9%

Dividend Yield With Specials: 15.5%

In February, I discussed CVR Energy (CVI) , an energy firm that deals in renewable fuels and petroleum refining—and through its interest in CVR Partners LP (UAN) , it also manufactures nitrogen fertilizer.

I pointed out that CVR Energy had built up a massive bear crowd that sold 28% of shares short as of February . That number is down considerably, but still high at 17%, as the company still figures out what it plans on doing with UAN.

As I said at the time:

“Investors cheered CVR’s summer announcement that it wouldn’t pursue a spinoff of its UAN stake—good news, if nothing else, for the dividend. But the jump in stock price also triggered a big buildup of shorts—a buildup that continued after Carl Icahn (who still owns roughly two-thirds of all CVI stock) sold 4.1 million shares in September.”

But Icahn hasn’t sold more since. In fact, on March 18, Carl Icahn filed an SEC Form 3 reporting he owned a 36.8% stake in CVR Partners. Meanwhile, CVR Energy also made a filing saying that it and the activist investor’s Icahn Enterprises (IEP) were considering potential strategic transactions for UAN, “which may include the acquisition of additional entities, assets or businesses, including the acquisition of material amounts of refining assets through negotiated mergers and/or stock or asset purchase agreements by the Company or its subsidiaries.”

That deal is, to be blunt, an unknown. What is known is CVI’s more responsible regular-and-special dividend program, which it (and other energy firms) adopted in 2022 following COVID-sparked distribution cuts. Its regular payout is nothing to sneeze at, representing a nearly 7% yield currently. But its trailing-12-month specials have amounted to more than 15%.

It’s the energy sector. CVR is hardly an E&P play that ebbs and flows on oil prices, but it’s not irresponsible to suggest its cyclical nature might result in some years without any special dividends. Even then, the regular payout is substantial, and the specials elevate that to downright terrific. But the Icahn situation, while seemingly improving, still leaves a large cloud of uncertainty over shares.

BlackRock TCP Capital Corp. (TCPC)

Listed Dividend Yield: 12.7%

Dividend Yield With Specials: 15.9%

BlackRock TCP Capital Corp. (TCPC) is an externally managed business development company (BDC) that invests in the debt of middle-market companies with enterprise values of between $100 million and $1.5 billion.

TCPC currently has 157 companies in its portfolio, spread across a few dozen industries. But it does have a few heavier concentrations—internet software and services (~13%), diversified financial services (~13%) and software (~11%) earn double-digit weights.

That said, investors are getting a new-look TCPC following the March closing of its merger with BlackRock Capital Investment Corp. (BKCC). That comes with a very tangible benefit, in which the BDC’s advisor agreed to reduce base management fees by 25 basis points, to 1.25%.

As I’ve previously said , the move should give TCPC significantly more scale, but I want to see what happens to my favorite aspect of TCPC: Its special dividends.

BlackRock TCP has been raising its quarterly dividend over time, but it’s also starting to rely on special dividends to share the wealth without overcommitting. In 2023, TCPC has distributed or announced 35 cents’ worth of specials—given that its regular is 34 cents, it’s like investors are getting a fifth quarterly payout!

So far, all special payouts have come in the back half of the year, so we’ll have to wait a bit to determine whether TCPC will further entrench this routine.

Brett Owens is Chief Investment Strategist for Contrarian Outlook . For more great income ideas, get your free copy his latest special report: Your Early Retirement Portfolio: Huge Dividends—Every Month—Forever .

Disclosure: none

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How Marketers Can Adapt to LLM-Powered Search

Stefano Puntoni,
Mike Ensing,
Jarvis Bowers

With the addition of AI-generated overviews, Google, Perplexity, OpenAI and other search engines are changing how consumers find information.

Large language models (LLMs) provide a search experience that’s dramatically different from the web-browser experience. The biggest difference is this: LLMs promise to answer queries not with links, as web browsers do, but with answers . Increasingly, using apps such as ChatGPT or Perplexity, or search portals such as Google’s Search Generative Experience (now AI Overviews) or Bing’s Copilot, customers will learn about products and brands through natural-language outputs. And that process, which will be highly consultative and conversational, will create a new information pipeline that marketers need to monitor to ensure their brands are presented for relevant prompts and described accurately. The authors present three ways for marketers to rise to this challenge.

For millions of consumers around the world, Google is the access point to the internet — and as a result, the company today enjoys a 91% market share in the $50 billion market for search ads. However, thanks to the advent of large language models (LLMs), a shakeup now seems possible for the first time in two decades.

SP Stefano Puntoni is a professor of marketing at the Wharton School, University of Pennsylvania, and the co-author of Decision-Driven Analytics: Leveraging Human Intelligence to Unlock the Power of Data (Wharton Press).
ME Mike Ensing is the CEO and co-founder of Revere. He is an entrepreneur, advisor, and tech-industry executive focused on generative AI and its applications for enterprises and brands and has held senior and advisory positions with leading companies such as RealNetworks, Microsoft, and McKinsey.
JB Jarvis Bowers is the COO and co-founder of Revere, an emerging marketing-technology company focused on elevating brands with LLMs and generative AI. Jarvis is an experienced marketing leader focused on the use of consumer and creative insights, customer data, and emerging platforms to deliver unique brand experiences.

Partner Center

Here's Why Booking Holdings (BKNG) is a Strong Growth Stock

Taking full advantage of the stock market and investing with confidence are common goals for new and old investors, and Zacks Premium offers many different ways to do both.

The popular research service can help you become a smarter, more self-assured investor, giving you access to daily updates of the Zacks Rank and Zacks Industry Rank, the Zacks #1 Rank List, Equity Research reports, and Premium stock screens.

Zacks Premium also includes the Zacks Style Scores.

What are the Zacks Style Scores?

The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.

Based on their value, growth, and momentum characteristics, each stock is assigned a rating of A, B, C, D, or F. The better the score, the better chance the stock will outperform; an A is better than a B, a B is better than a C, and so on.

The Style Scores are broken down into four categories:

Value Score

Value investors love finding good stocks at good prices, especially before the broader market catches on to a stock's true value. Utilizing ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and many other multiples, the Value Style Score identifies the most attractive and most discounted stocks.

Growth Score

Growth investors are more concerned with a stock's future prospects, and the overall financial health and strength of a company. Thus, the Growth Style Score analyzes characteristics like projected and historic earnings, sales, and cash flow to find stocks that will see sustainable growth over time.

Momentum Score

Momentum investors, who live by the saying "the trend is your friend," are most interested in taking advantage of upward or downward trends in a stock's price or earnings outlook. Utilizing one-week price change and the monthly percentage change in earnings estimates, among other factors, the Momentum Style Score can help determine favorable times to buy high-momentum stocks.

What if you like to use all three types of investing? The VGM Score is a combination of all Style Scores, making it one of the most comprehensive indicators to use with the Zacks Rank. It rates each stock on their combined weighted styles, which helps narrow down the companies with the most attractive value, best growth forecast, and most promising momentum.

How Style Scores Work with the Zacks Rank

The Zacks Rank, which is a proprietary stock-rating model, employs earnings estimate revisions, or changes to a company's earnings expectations, to make building a winning portfolio easier.

It's highly successful, with #1 (Strong Buy) stocks producing an unmatched +25.41% average annual return since 1988. That's more than double the S&P 500. But because of the large number of stocks we rate, there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.

With more than 800 top-rated stocks to choose from, it can certainly feel overwhelming to pick the ones that are right for you and your investing journey.

That's where the Style Scores come in.

You want to make sure you're buying stocks with the highest likelihood of success, and to do that, you'll need to pick stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you like a stock that only as a #3 (Hold) rank, it should also have Scores of A or B to guarantee as much upside potential as possible.

Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.

Here's an example: a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one with Style Scores of A and B, still has a downward-trending earnings outlook, and a bigger chance its share price will decrease too.

Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Norwalk, CT-based Booking Holdings Inc. is one of the largest online travel companies in the world. The company’s travel-related offerings cover hotel rooms, airline tickets, rental cars, vacation packages, cruises, “things to do” at customer destinations and travel insurance.

BKNG is a #3 (Hold) on the Zacks Rank, with a VGM Score of A.

Additionally, the company could be a top pick for growth investors. BKNG has a Growth Style Score of A, forecasting year-over-year earnings growth of 17.3% for the current fiscal year.

11 analysts revised their earnings estimate upwards in the last 60 days for fiscal 2024. The Zacks Consensus Estimate has increased $3.08 to $178.54 per share. BKNG boasts an average earnings surprise of 22.5%.

With a solid Zacks Rank and top-tier Growth and VGM Style Scores, BKNG should be on investors' short list.

Zacks Investment Research

Money blog: Nike scores win over big rival Adidas's trademark

Nike is celebrating a partial victory over rival brand Adidas in court, as it has been permitted to put three stripes on some designs in Germany. Read this and the rest of today's consumer and personal finance news in the Money blog below, and leave your thoughts in the comments box.

Thursday 30 May 2024 15:50, UK

Sellers warned 'be realistic' as most homes on market in eight years
Think twice before buying clothes from Zara before your holiday
Prospective parents putting off having children by cost of living crisis
Manchester United staff 'given week to resign' in Sir Jim Ratcliffe's WFH crackdown

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Best of the Money blog - an archive

Ask a question or make a comment

Tourists headed to Scotland for holidays will face a tourist tax for hotels, bed and breakfasts and holiday lets.

The Scottish Parliament passed the Visitor Levy (Scotland) Bill two days ago, meaning local authorities can set a charge for overnight accommodation.

According to the bill, the fee will be a percentage of the cost of a hotel or other room.

For instance, a 1% levy on a £200 booking means a visitor would pay £2 in tourist tax.

However, any charges or levies will not come into effect until spring 2026, as councils will first have to consult local businesses before carrying out an 18-month implementation period.

Those receiving disability benefits will not pay any charges, with children and young people also exempt.

Ministers will also have the power to set a cap on the number of nights where a levy would apply.

It will also be up to councils if they want to put a charge in place - but with Holyrood research suggesting 17 of Scotland's 32 councils backing the plans, it is likely some visitors will be hit by charges.

Scotland's employment and investment minister Tom Arthur said on Tuesday the charge would be a " force for good", suggesting it "has the potential to be an important tool enabling investment in the local economy, and supporting an important industry".

However, Scottish Conservatives argued there needed to be a more "robust" exemption scheme, with housing spokesman Miles Briggs saying: "Scots will be pretty unhappy when they realise that they will have to pay a 10% tax to stay in a hotel when their house is flooded."

The new law means Scotland joins Manchester, Bournemouth, Christchurch and Poole in charging tourists to stay the night.

Manchester's £1-a-night City Visitor Charge was introduced last April, and is estimated to have raised around £2.8m in its first year.

European hotspots like Barcelona and Venice have also introduced tourist taxes, with the Spanish city charging visitors €3.25 if they're staying in official accommodation.

Workers posing as Disney favourites such as Mickey Mouse, Minnie Mouse and Snow White in California have formed a union - Magic United.

There are roughly 1,700 performers and assistants who help to bring popular characters to life at Disneyland near Los Angeles.

Disney has faced allegations of not paying them a living wage, despite many facing exorbitant housing costs and commuting long distances.

Parade performers and character actors earn a base pay of $24.15 (£19) an hour, up from $20 (£15.75) before January.

Read on here...

Nike is celebrating a partial victory over rival brand Adidas in court, as it has been permitted to put three stripes on some of its clothing designs in Germany.

The decision came during a second appeal hearing between the two sportswear brands at a regional court in Dusseldorf.

The court previously barred Nike from using two or three stripes on five trouser designs due to a lawsuit filed by Adidas in 2022, which is on a mission to protect its trademark three-stripe design.

Following the appeal, Nike can now use the stripes on four disputed trouser designs, while a ban for one is still in place.

Adidas has filed dozens of lawsuits and signed hundreds of settlement agreements related to its three-tripe design since 2008.

The Conservatives and Labour have ruled out VAT hikes if either party wins the election.

Jeremy Hunt, the chancellor, said tax rises on products and services would "hammer families' finances", while shadow chancellor Rachel Reeves said Labour did not plan to raise tax, national insurance or VAT.

The pledges come after the Institute for Fiscal Studies said the next UK government would face the toughest fiscal inheritance in 70 years.

Ms Reeves said: "I want taxes on working people to be lower, not higher."

New tax rises were restricted to those policies already announced, such as a plan to charge 20% VAT on private school fees, she said.

Writing in The Telegraph, Mr Hunt said: "We won't increase the main rate of VAT for the duration of the next Parliament."

He continued: "A VAT increase will hammer families' finances and push inflation back up."

He urged Labour leader Sir Keir Starmer to make a similar commitment "on camera".

Follow all the latest election campaign news live in the Politics Hub ...

People who bank with TSB have had trouble getting into the mobile app this morning.

Many took to social media to report difficulty logging in to their accounts.

The official X account of TSB, responding to several complaints about the app being down earlier, said: "We're aware that customers are experiencing issues with our digital services. We're sorry for any inconvenience and are working hard to resolve it."

One customer reported that the app had remained down overnight:

In an updated statement, the bank said the issue has now been resolved.

"We're sorry for any inconvenience it caused," it said.

By Daniel Binns, business reporter

Shares in Auto Trader have rocketed more than 13% to a record high this morning.

It comes after the company reported a bumper set of results for the 2023/24 financial year - including a 26% rise in group operating profits.

The online car marketplace says recent demand has been strong - and it expects its performance to continue.

Dr Martens is also up on the FTSE 250 index - despite revealing it suffered an almost 43% fall in pre-tax profits during the 12 months to March (read more below...)

Its shares climbed more than 9% at one point earlier this morning, but have since eased back to almost 6%.

The British footwear brand has said it is "confident" it can revive its fortunes and says it plans to make savings of up to £25m to turn things around.

Elsewhere, the FTSE 100 is pretty flat - it opened 0.2% down but is currently up by a tiny 0.03%.

Mining firm Anglo American is among the companies hit by falls this morning.

Its shares have dropped by just over 1% after its rival BHP Group walked away from a proposed £38.5bn takeover of the company.

On the currency markets, £1 buys $1.27 US or €1.17 (or €1.1753, to be precise).

It comes after the pound reached a 19-month high against the Euro at one point yesterday - with £1 equalling €1.1784 - before later dropping back down.

The cost of a barrel of benchmark Brent crude has dipped slightly compared to yesterday. The price is $83 (£65).

If you're heading to Spain this summer and might get some of your holiday clothes from Zara, you might be better off waiting until you're over there.

The Spanish company sells items much cheaper over there - whether it's women's, men's or kids' clothes.

You can search prices in English on their Spanish website to get an idea of how much you'd save.

We found big potential savings on just about every item we looked at - and the savings are even bigger than usual, with the pound reaching a two-year high against the euro yesterday.

For example, this white mini dress with ruffled hem is €27.95 in Spain but £32.99 (or €38.74).

A black dress described as "flowing voluminous" is €29.95 over there, but £35.99 (€42.27) in the UK.

These men's "balloon fit" jeans are €35.95 in Spain, but £45.99 (€54.01) in the UK.

A double-breasted blazer suit and trousers is €129.9 in Spain, but in the UK you'd pay £158.99 (€186.72).

Finally, a ruffled gingham kids' jumpsuit is €22.95 compared with £25.99 (€30.52).

Martin Lewis first highlighted these potential savings in 2015 when he wrote: "This isn't just about Zara similar pricing structures apply for other members of the same group, Massimo Dutti, Pull & Bear and Uterqüe."

A Zara spokesperson told the Money blog: "Zara's fashion offer is the same in the over 200 markets where it is available: quality, well-designed products at compelling prices.

"These prices do vary between markets due to a number of factors which include shipping costs and exchange rates."

The supply of homes for sale has reached its highest level in eight years, according to a new report on the state of the housing market.

Zoopla said a 20% annual increase in properties has boosted choice for buyers and could help to steady house price growth over the rest of the year.

This idea is supported by Tom Bill, head of UK residential research at Knight Frank, who said growing supply is "one reason that UK house price growth this year will be limited to low single digits".

According to Zoopla, the average estate agent office has 31 homes for sale - the highest level in eight years and up from a low of 16 in 2022.

The South West has seen "well above average" growth in the number of homes for sale, the property portal said, with a third more homes on the market across the region compared to a year ago.

The increase has likely been fuelled by planning changes in relation to holiday lets and the prospect of double council tax for second homes, Zoopla said.

According to Zoopla, a 13% increase in sales agreed has failed to keep pace with growth in the number of properties on the market.

Growth supply across the UK has been driven by a "rebound" in the number of three and four+ bed homes for sales as mover confidence improves, it said.

On property prices, Zoopla said there are still geographical divides with southern regions seeing "modest" falls, while the strongest price growth is seen in Belfast (3.6%), Burnley (2.5%) and Bolton (2.4%).

This compares to the biggest falls in Ipswich (-3%), Hasting (-2.7%) and Norwich (-2.4%).

The north-south divide is "primarily driven by affordability pressures in the face of higher mortgage rates", according to Zoopla - and it is expected to persist throughout 2024.

Richard Donnell, executive director at Zoopla said growth in the supply of homes for sale is "evidence of renewed confidence amongst homeowners".

Homeowners who are "serious about moving in 2024" should price their homes "realistically" to achieve a sale, he added.

Mr Bill said the "main obstacle" faced by buyers is "stubborn" inflation, which is keeping mortgage rates high.

"Asking prices therefore need to reflect the fact that buyers have more choice and tighter budgets," he said.

More than a fifth of would-be parents have made changes to their plans to start a family or have put it off altogether due to the cost of living, a new poll suggests.

Inflation has pushed expenses for the average family with young children up by more than £1,000 a month, research by mutual Royal London has found.

And despite inflation falling to its lowest level in nearly three years in April, the annual rate of price rises still stands at 2.3%, meaning life is still more expensive than it used to be.

Its survey of more than 4,000 adults reveals that 22% of people aged 18 to 34 have made alterations to their family planning due to the cost of living crisis.

Some 8% of people in this age bracket said they have delayed having children due to a lack of funds.

Nearly a fifth (18%) of surveyed adults who are parents said rising costs mean they have been left with no money for unexpected bills or emergencies.

Sarah Pennells, consumer finance specialist at Royal London, said it's clear that people are now "making changes to their longer-term life plans".

"When prices for food and energy were increasing, we saw people cut back and make changes to their spending and shopping habits, but now we're seeing that some major life decisions are being delayed as people are weighing up whether or not they can afford to act on the plans they'd made."

Lender Creditspring says having children is "fast becoming a luxury that is financially out of reach for a huge number of prospective parents".

"Millions of younger people are in the impossible position of having to choose between children and their financial security," chief executive Neil Kadagathur said.

Every Thursday Savings Champion founder Anna Bowes gives us an insight into the savings market and how to make the most of your money. This week, she's looking at Lifetime ISAs.

With inflation falling and savings rates staying pretty stable, the majority of savings accounts are paying more than inflation.

But if the interest is tax-free and you can benefit from a 25% government bonus on each deposit, that makes the Lifetime ISA (LISA) an even more important savings account to consider if you are eligible.

The top two accounts are not actually offered directly by banks but instead they are financial apps that use various partner banks which will vary from time to time.

So you need to do your research to check that opening a LISA with either provider will not take you over the Financial Services Compensation (FSCS) limit, which is £85,000 per banking licence.

Introduced in April 2017, the LISA offers a much-needed boost for younger savers who are looking to save for a deposit on their first home or for retirement.

The LISA is the obvious choice for anyone aged 18-39, as you can deposit up to £4,000 a year and you'll receive a government bonus of 25% on each deposit, which you can keep as long as you use the proceeds to buy your first house - or until you are aged at least 60 as a retirement pot.

And the proceeds are tax-free.

If you deposited a lump sum of £4,000 a year for five years, you would receive £1,000 bonus in the month after the deposit - and after five years, assuming an interest rate of 4.40%, which is the best cash LISA rate available, you would have around £28,500 - made up of:

£20,000 personal deposit
£5,000 government bonus
£3,500 tax-free interest

There are plenty of rules to watch out for with a LISA too, so it's important to know the restrictions as well as the benefits before committing the money.

For example, there is a penalty for withdrawing the cash before the age of 60 for anything other than a first home purchase and the LISA must be held for a minimum of 12 months to avoid the charge.

The penalty, if it were to apply, is 25% of the amount withdrawn.

Although this would seem to simply be a return of the government bonus, it actually works out that there is an extra penalty of roughly 6.25% that will apply.

So, as well as losing the bonus, some of the money deposited would also be taken.

A LISA can be held in cash or in stocks & shares.

The most appropriate choice would depend on timelines, with shorter term funds usually better kept as cash and invested stocks and shares ISAs being more suitable for long-term money (five-plus years).

Any interest or growth would be tax-free within that Lifetime ISA wrapper.

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How to research stocks
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Step 1: Define your investment goals and risk tolerance. Determine whether your investment objectives focus on long-term growth, income generation or both. Assess your risk tolerance to guide your investment decisions. Determine which sectors or industries align with your investment strategy and interest.
How to Research Stocks
The fundamental difference between quantitative and qualitative research lies in numbers and words. Quantitative research deals with numbers and statistics. That is where you'll find terms like standard deviation, percentiles, price-to-earnings ratios, beta in stocks, etc. Quantitative research relies on data-driven techniques to identify market trends and trading signals.
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Get My Guide. The stock market is often divided into eleven sectors, uncover stock sectors for a more structured method to stock research. 4. Understand the company product/service. Familiarising ...
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Determine what kind of investor you are. Before you can dive into the nitty-gritty details of stock research, you should take some time to understand what type of investor you are. You also want to understand the type of investments that will work well for your financial goals. Essentially, you need to know what you are looking for.
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Before you do any research on stocks, decide how much you want to invest. One investment strategy is to choose a low-fee, diversified mix of assets like robo-advisors. You could pick individual stocks, but that's a practice that's notoriously risky. If you plan to select stocks yourself and make trades, be warned that you could end up losing ...
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Key ratios. Calculate ratios like price-to-earnings (P/E), return on equity (ROE), and debt-to-equity (D/E) to determine if a stock is overvalued or risky. A high P/E could mean a stock is overvalued. A low ROE or high D/E ratio indicates higher risk. Compare ratios to industry averages and the company's historical ratios.
How to Invest in Stocks: Step-by-Step Beginner's Guide
You can invest in individual stocks if -- and only if -- you have the time and desire to thoroughly research and evaluate stocks on an ongoing basis. If this is the case, we 100% encourage you to ...
How To Research Stocks: A Beginner's Guide
Despite their flaws, however, two strategies have risen to prominence. Any investor who wants to learn how to research stocks should attempt one of the following strategies: Fundamental Analysis: As its name suggests, a fundamental analysis attempts to assume an equity's true value based on fundamental indicators.
5 Steps To Take To Do Stock Market Research on Your Own
Scroll through Twitter. If the company's fundamentals look good — or if you're a day trader, even if they don't — you could do technical analysis on the stock. Check out the stock's chart and look for patterns based on historical data. You can use technical analysis to build the case for trades.
How to Research Stocks
Narrator: You can use the price-to-earnings ratio to see how much you're paying for a company's earnings and whether the stock is over or undervalued. It compares the price of a share of a company's stock to the company's earnings per share. If a stock is trading at $20 and its earnings per share are $1, then the stock has a P/E of 20.
10 Ways To Pick Fundamentally Strong Companies
1. Fundamental analysis. This type of stock analysis evaluates the underlying company's fundamentals - business segments, financials, management, past performance, peers, and so on. The fundamental analysis places importance on the stock's intrinsic value and sectoral and broader economic conditions. Under the financials, a fundamental ...
How to Do Market Research: The Complete Guide
Monitor and adapt. Now that you have gained insights into the various market research methods at your disposal, let's delve into the practical aspects of how to conduct market research effectively. Here's a quick step-by-step overview, from defining objectives to monitoring market shifts. 1. Set clear objectives.
How to do market research: The complete guide for your brand
Step 5: Make decisions for your business. Now it's time to take your findings and turn them into actionable insights for your business. In this final step, you need to decide how you want to move forward with your new market insight.
Nvidia Announces a 10-for-1 Stock Split. Here's What Investors Need to
Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More Nvidia Announces a 10-for-1 Stock Split.
What Does Nvidia's Stock Split Mean for Investors?
The Date for Nvidia's Stock Split. According to the company's press release, the split is slated to occur after the stock market's close on June 7. Shares will trade on a post-split basis ...
Do Options Traders Know Something About Humana (HUM) Stock We Don't?
Investors in Humana Inc. (HUM Quick Quote HUM - Free Report) need to pay close attention to the stock based on moves in the options market lately. That is because the Jun 21, 2024 $220 Call had ...
Most Stock Screens Miss These High-Yield Dividends (Up To 16.%)
Their superior yields go completely unnoticed—except to investors willing to do the extra research. Let me show you what I mean with a few dividend payers with "hidden" yields of up to 16%.
How Marketers Can Adapt to LLM-Powered Search
For millions of consumers around the world, Google is the access point to the internet — and as a result, the company today enjoys a 91% market share in the $50 billion market for search ads ...
Here's Why Booking Holdings (BKNG) is a Strong Growth Stock
Taking full advantage of the stock market and investing with confidence are common goals for new and old investors, and Zacks Premium offers many different ways to do both. The popular research service can help you become a smarter, more self-assured investor, giving you access to daily updates of the Zacks Rank and Zacks Industry Rank, the ...
Money blog: This savings account could bag you a free £8,500 in five
Savings Champion founder Anna Bowes is back with tips on the savings market and how to make the most of your money. Read this and the rest of today's consumer and personal finance news in the ...

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Stock Research: How to Do Your Due Diligence in 4 Steps

What is stock research?

4 steps to research stocks

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How to Research Stocks – A Step-by-Step Guide

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