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Investing Tips: Beginners Guide To Stock Market Research

stock market research

For a lot of people, investing conjures up ideas of difficult calculations. However, you don’t need to be an expert to start investing. Even if you only have a few bucks to spare, you can make your money grow in the stock market as long as you do your research well. Here is a guide for beginners on how to invest and do research on the market.

  1. Go Through Stock Market Websites Or Blogs

Gather materials on market research and read through them thoroughly. Most of the price movements in the stock market are driven by market sentiment and its analysis. By going through stock market websites and blogs, you will be updated with the latest market news and be able to plan you next move.

Once you are able to see what’s happening, you can fit your company or stock into that big picture by comparing it to similar businesses. You can make more calculated decisions from what you find out through these resources. Here’s a list of stock research sites to get you started.

  1. Learn The Lingo

Just like in every other industry, the stock market has its own set of lingos. To be able to understand what’s happening and what you are reading about, you need to get familiar with the terminology of the industry. Narrowed down, here are just some of the most commonly used terms and their definitions.

Earnings Per Share (EPS) – Earnings per share is derived by dividing earnings by the total number of shares that are available to trade in the stock market. To analyze a stock, people usually use the EPS to measure the company’s profitability on a per-share basis. Then, you can use this as a benchmark to make comparisons with other companies.

Return On Equity (ROE) And Return On Assets (ROA) – ROE and ROA are financial ratios that measure returns from funds deployed. Specifically, ROE measures the profit generated from each dollar. On the other hand, ROA is the percentage of the profit generated from each dollar of assets. These ratios will give you an idea of how efficient the company is at generating profit.

Price-Earnings Ratio (P/E) – P/E is calculated by dividing the company’s stock price by EPS. This ratio lets you know how much investors are willing to pay for the stock share.

  1. Read SEC Filings And Analyst Opinions

Reading SEC filings should also be part of your research. Usually if companies have announcements to make, they will file it with the SEC for reporting. In addition to that, you will also find quarterly and annual reports on companies in SEC filings. So, this should also be part of your research.

Another good resource is the research and analyst reports that brokerage firms and research companies write. These analyst reports can give you a different insight into a particular investment from experts in the industry. It would also help to read reports prepared by different analysts to get a more holistic idea of the stock’s position.

  1. Keep Up To Date With Company News

It is vital that you keep up to date with company news and operations. You can do a generic search on Google News. On the other hand, you can also subscribe to news channels to provide you a daily newsletter for business news. Everything that happens to the company will affect stock prices, so you need to keep up to date with the current happenings in the company that you are investing in.

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  1. Do Qualitative Research

Aside from keeping up with news on the company, you also need to conduct qualitative research on the company. This means that you need to look into the intricacies of the financials and operations of the company. Find out how it is performing, know its business model, and learn about its competitive advantage. Part of looking into a company is also analyzing if it has a good management team to steer the company towards more profitable activities. Here are just some of the questions that can guide you through your qualitative research.

  • Who is in the management team? What are their qualifications?
  • What sets apart this company from all the others?
  • How does the company make money?
  • What are the risk mitigation measures put in place by the company?

Conclusion

Doing research on the stock market will require hard work, but the information that you’ll uncover will be vital in your investments. Just go through the right blogs, get analyst opinions, and go through SEC filings to be on top of what’s happening in the market.

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Susan

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