Stock Analysis Checklist
Learn how to research & analyze stocks
Checklist of important points to check when
researching growth stock candidates.
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Learn How to Analyze Stocks
"Fire Your Stock Analyst"
A Step-by-Step Guide by Harry
Domash
What
Where
One-year
Yahoo! Finance
Price chart
Why
Action
Buying a stock
O.K. to buy
(finance.yahoo.com >
while its in a
if stock
with 50-day
ticker symbol >Charts >)
downtrend is
price is
moving
Click on Technical
dangerous, as it
above its
average
Analysis in the Charts
will likely move
50-day
section. Select 50-day
lower. A stock is
moving
moving average. sample
in a downtrend
average.
if its price is
below its MA,
and in an
uptrend if
above. Use the
50-day MA.
Price/Sales
ratio (P/S)
Valuation
O.K. to buy
check. A stock
if P/S is less
(moneycentral.msn.com >
with a P/S
than
ticker symbol > Financial
above 10 is
10. P/S
Results > Key Ratios >
momentum
ratios
Price Ratios)
priced.
between 3
sample
Buying
and 5 are
momentum
best for
priced stocks is
growth
only
stocks.
recommended
Ratios
in a strong
below 2
MSN Money
Valuation Ratios
market.
reflect value
priced
stocks.
Cash Flow
MSN Money
per share
Valuation Ratios
Companies with
O.K. to buy
positive
if Cash
operating cash
Flow per
flow are safer
share is a
investments
positive
than cash
number.
burners
(negative cash
flow).
Average
Daily
MSN Money
Institutional
O.K. to buy
Price & Volume
buying is an
if Average
Volume
(moneycentral.msn.com >
important
Daily
(shares)
ticker symbol > Company
catalyst for
Volume is
Report) Look in Stock
stock price
100,000
growth.
shares or
Institutions buy
higher (0.1
hundreds of
mil), and
thousands of
above one
shares and
million
prefer stocks
shares is
with large daily
best.
Activity Section
sample
trading volumes
so they can
easily move in
and out of
positions.
Financial
Morningstar Snapshot
Invest, dont
O.K. to buy
Health
(www.morningstar.com >
gamble! Stick
if Financial
Grade
ticker symbol > Snapshot)
with companies
Health
Morningstar Stock
with solid
Grade = A,
Grades
financials.
B or C
sample
Growth Grade
Consistent
O.K. to buy if
Morningstar Stock
strong sales
Growth Grade =
Grades
growth over
A or B
Morningstar Snapshot
extended
periods
translates to
long-term
stock price
appreciation.
Lack of
O.K. to buy if
Ownership
institutional
institutions own at
(moneycentral.msn.com >
ownership
least 30% of
means
shares
mutual funds,
outstanding.
Institutional
MSN Money
Ownership
ticker
symbol > Ownership)
sample
pension
plans and
other
institutional
buyers dont
think they will
make money
owning the
stock. Why
would you
want to own
it?
Number of
Analysts Making
Buy/Hold/Sell
Recommendations
Yahoo! Finance
A companys
O.K. to buy if a
(finance.yahoo.com >
performance
total of at least four
can go
analysts are listed
unrewarded
as currently
if nobody
making strong buy,
knows about
buy, hold,
it.
underperform, or
Sufficient
sell
analyst
recommendations.
coverage is
Look only at the
necessary to
total number of
create
analysts making
investor
recommendations,
interest,
not whether there
especially
are more buys
from
than holds, etc.
ticker symbol > Analyst
Opinion)
sample
institutions.
- - - - - - - - - - Advanced Research & Analysis- - - - - - - - - - Calculator Required
Gross Margin
Trend
Changes in
Gross margin (GM) is
Income Statement
gross margin
the "Gross Profit"
(moneycentral.msn.com >
percentages
divided by "Total
ticker symbol > Financial
from quarter to
Revenue," expressed
Results > Statements >
quarter point to
as a percentage.
changes in a
Calculate the GM for
Interim)
companys
each of the past five
sample
competitive
quarters, and observe
position in its
the GM trend.
MSN Money
Income Statement >
marketplace.
O.K. to buy if the trend
Increasing gross
is flat or increasing.
margins signal a
Ignore variations of
n improving
less than 1%, e.g.
competitive
from41% to 40.5%.
position, and
declining
margins warn of
increasing
competition.
Revenue Growth
Rate
Latest Quarter
compared to
year-ago quarter
Slowing
Use your calculator to
revenue (sales)
compute the most
growth is an
recent quarters
> ticker symbol >
important red
(MRQ) revenue
Financial Highlights)
flag signaling
growth
sample
danger ahead.
rate(percentage) vs. t
Reuters
Financial Highlights
(reuters.com/finance/stocks
he year-ago
quarter.Compare that
figure to the 1 Year
sales growth listed in
the Growth Rate
section.
Ideally, the MRQ
growth should exceed
the 1-year figure,
signaling accelerating
growth. But, it's O.K.
to buy if MRQ growth
is at least 85 % of
1-Year growth.
Forecast Revenue
Growth Rate
Yahoo! Finance
(finance.yahoo.com > ticker
symbol >Consensus
Look at
Check the forecast
consensus
revenue growth
revenue
percentage for the
Estimates)
forecasts to
current quarter vs. the
sample
determine if
corresponding
historical growth
year-ago quarter.
rates are
Ideally, the growth
expected to
rate should be
continue.
accelerating but
it's O.K. to buy if the
forecast
year-over-year
revenue growth is at
least 80% of the
1-Year
growth from the
previous step.
Accounts
ReceivablesGrowt
h vs. Sales
Growth
Accounts
Compute
Income Statement
receivables are
the ratio for the most
& Balance Sheet
monies owed by
recent and the
(moneycentral.msn.com >
a companys
year-ago quarters.
ticker symbol > Financial
customers for
Ideally the most
goods received.
recent ratio would be
The Accounts
less than year-ago,
Receivables
but it's O.K. to buy if
Ratio (ratio) is
the ratiois the same or
the net
lower than year-ago.
receivables
Ignore increases that
divided by the
are less than 5%, e.g.
revenue for the
from 60% to 64%.
MSN Money
Results > Statements >
Income Statement > Interim
sample
& Balance Sheet > Interim)
sample
same quarter.
A significantly
higher ratio vs.
year-ago is a
red flag pointing
to future
problems.
