Try valuebuddies forum

You can check out our website too: https://learntoinvests.com/

As we teach and share more tips on investing too:)

Blogs are a good way. You can check out our blog for more info where we share both the qualitiative and quantitative aspects of evaluating a stock!

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https://learntoinvests.com/

When you're evaluating whether to buy a certain stock, you're making a decision about an assumed future based on the past and the present. My mental model for trying to de-risk that decision is to try and answer a series of questions:

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Present

• What is the business model? How does the company make money?
• What are the competitive advantages?
• What are the risks?
• What is the management like? How are they compensated? Have they been buying or selling the stock? How long has the senior management been in place? Have they made any big business decisions lately?

You can find the answers by googling and/or reading the company's annual report.

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Past

• Is it currently trading at a good valuation? An intrinsic value calculation helps, as do ratios like P/E, P/FCF and also comparing the current stock price with the 52 week range.
• Is the value increasing? Check a stock price chart and 50/200-day moving averages.
• Is revenue growing? Check quarterly and yearly revenue charts.
• Are earnings growing? Check quarterly and yearly net income and EPS charts; also check analyst growth estimates.
• is equity growing? Check shares outstanding and shareholder equity charts.
• Is cash flow growing? Check operating cash flow and levered free cash flow charts. If the pattern is very different to the earnings chart, try to reason about why.
• Is the dividend growing? Check the dividend yield, payout ratio, payout history. What is the dividend growth rate? What is the dividend volatility? How many consecutive years of dividend payments? How many consecutive years of dividend growth?
• Can the company cover its debt in the next year? Check the total debt vs total cash, the debt-to-equity ratio, and the current ratio.
• Is the business profitable? Check return on assets, return on equity, profit margin, operating margin, and quality of income.
• What is the recent news about the company?

You can find the answers to most of these in the company's annual report, as well as other resources like Yahoo Finance and even Google. It's a good idea to compare ratios against other companies in the same industry and sector. The answers don't have to be perfect for the stock to be a buy, just good enough according to your own risk tollerance.

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