Learn Stock Investing through Fundamental Analysis

By Stock Research Pro • March 31st, 2011

If you are interested to learn stock investing and the fundamental analysis approach to identifying potential stock investing opportunities, Stock Research Pro offers a free guide to help you get started. The Guide to Fundamental Analysis is a 22-page report that covers all aspects of stock technical analysis- from filtering for stocks that might represent good candidates for investment, to reviewing company financial statements, the strength of the company management team, and more.

The Basics of Fundamental Analysis in Stock Investing

Fundamental analysis is an approach to stock market investing that is concerned with a company’s financial strength, prospects for growth, executive team, and all other things that are specific to the company under analysis. Unlike technical analysis, the fundamental approach does not concern itself with historical price behavior, believing instead that, over the long-term, the financial strength and performance of a company will be reflected in its stock price. Value investors like Warren Buffett are proponents of the fundamental approach as they believe that it is not uncommon for promising stocks to fall temporarily out of favor with the market. It is this imperfection in pricing that can lead to fantastic stock investing opportunities.

The Primary Components of Fundamental Analysis

Some of the main things a fundamental analyst will review as part of the research process include:

  • Price/Earnings Ratio (P/E)- The price/earnings ratio helps the investor determine how much they are paying for a stock in relation to its earnings-per-share (EPS). In this way, the P/E ratio provides a valuation measure and the relative appeal of a stock price. Generally speaking, the lower the P/E ratio, the less you are paying for company earnings.
  • Price/Earnings to Growth Ratio (PEG)- Like the P/E ratio, the PEG ratio is a valuation measure that looks at stock price relative to company earnings, but the PEG ratio factors in earnings growth as a more accurate way of arriving at the real value of a stock.
  • Click here for a PEG ratio calculator

  • Price/ Book Ratio (P/B)- The price/book ratio enables investors to compare the book value of a company against the current market value. P/B is another way of gauging the relative value of a stock as a low P/B compared to industry competitors can represent a good investment opportunity.
  • Click here for a P/B ratio calculator

  • Dividend Yield (DY)- When looking at companies that pay dividends to their shareholders, the dividend yield provides a measure of how much the company pays in dividends compared to its stock price. It is an easy way to measure the cash flow you are getting from a dividend stock.
  • Click here for a dividend yield calculator

    The Guide to Fundamental Analysis is available for download by signing up at the Stock Research Pro website.


    The above information is educational and should not be interpreted as financial advice. For advice that is specific to your circumstances, you should consult a financial or tax advisor.

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