Stock Market Research Methods

New investors often wonder how to conduct stock market research in an efficient way to get a real sense of the viability of any given stock investing opportunity. Fortunately, there are many tools available that help investors conduct their research thoroughly and enable the ranking of stocks based on any given set of investment criteria.

Work with a Stock Screener

A stock screener is a powerful and readily-available tool that investors can use to sort through the volumes of stocks and determine which may present the best opportunity for investment given any specific set of investment criteria. Working with a stock screener, the investor might decide to filter based on such things as:

Low price/earnings (P/E) ratio

High earnings per share (EPS)

High market capitalization (“market cap”)

High dividend yield

While there are many parameters you might enter using the screener, the ones you choose should be based on your investing strategy given your financial goals, timeline, and risk tolerance.

Conduct More Thorough Analysis

The criteria you use for stock screening should return a good list of stocks for you to conduct more thorough research using a fundamental analysis approach, a technical analysis approach, or some combination of the two.

Fundamental analysis- Under a fundamental approach to stock analysis, you will focus on the factors that are specific to the company. Financial health and viability, strength of management team, and prospects for industry growth are all considered under this approach.

Articles on Fundamental Analysis

Technical analysis- Under a technical approach, the focus is on the price behavior of the stock and what it can tell you about its future price direction. Technical investors spend more of their time reviewing chart data in order to identify such things as support, resistance, and current trend to make an investment decision.

Articles on Techncial Analysis

You may decide that some combination of the two will be your best approach to stock research. You might also consider working in a virtual trading environment to test your strategies before making any actual investments.

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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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