How much background information do you perform on a company before buying their stock?

-And...what do you look for?

-Where do you look for the information?

-Are there any 'tells' either positive or negative that would get you to ignore or buy? (Red flags\Green flags)

My father once told me that he failed to invest in Under Armour because he thought they had too much competition from Nike. I looked at him askew, and said, "Yeah, but they were cooler than Nike." My brother's and I played a lot of sports, and I can remember the rise of UA quite well.

 

I download the comprehensive research report from my brokerage's web site to begin with. The consistency of the reports' format makes the reading pretty straight forward. These reports additionally include industry and sector information. The company web site is worth visiting.

Next, a visit to NASDAQ.com, again with consistently formatted information. I'll look through the Bloomberg and Reuters Business web sites for the very latest news.

Lastly, for gIggles and grins I look at Seeking Alpha and StockTwits to gather a sense of what others may be saying.

If I am interested, it goes on watch lists offered by the brokerage web site, Bloomberg and others. New information is automatically brought to my attention.

What do I invariably look at first? The P/E ratio attracts my attention. It has to be reasonable (for the industry). Nosebleed ratios are a no-no for me. Obviously there are many other things to evaluate if you are a value investor.

If I decide to initiate a position, I'll typically look for a, say, 5% pullback on a slow or down market day or an RSI oversold indicator. Just my opinion based upon observations during the day, the best time period to place a market order -- with no significant market news or events -- is an hour or so after Europe closes, lasting until about an hour before US markets close, when prices and volume seem to dip. Even then, I'll use a limit order to buy.

HTH. YMMV.

 

Wow, thank you baudwalk. Very straightforward information. I obviously have a lot to learn. Some of these terms I am unfamiliar with. Looks like I'll be spending time on this site and others to learn more.
I've hear Amazon has a poor P/E ratio. Any opinion on them?
Thanks, again!

 

No opinion on Amazon. Never investigated it. Never was interested with such a lofty share price, not profitable for years, and no dividends. Sorry... good luck.

 

Yeah, the profit thing is why I asked. It seems like such a strange stock and company. I use them all the time and have been a Prime member for years, but that they do not make a profit does not surprise me very much. I also heard working there sucks.

 

I just tracked AMZN, It's sell on rise, 483-513 selling range long term, sl. around 540, targets 430-350-300-260 , Once it slipped below 404, It will fall faster.In 4 months, all Targets will get achieved.

 

I tend to do my own research - looking at annual reports etc etc - but also look at what brokers are saying. I can get access to a fair few broker notes and while I won't necessarily base my opinion on what they think, it's good to know what the big players are recommending to their clients and why.

I don't do anywhere near as much primary research as I used to (and anywhere near as much as I should). But I do have a general template approach that I tend to apply, almost like a checklist, based on how I looked at stocks in a previous life as an analyst.

 

Hm, this almost seems like the easy part with the final decision being the difficult. Thank you for your posts. This seems like something I would really like to do (I was named after a fictional detective), and when my father was an analyst he used to have me organize this series of stock analysis that he subscribed to. If my parents hadn't gotten divorced, I probably would be doing this for a living.

 

I like to do my own research, 3 main things.

1. Check out the numbers. For this I usually use yahoo finance.
2. Read the company's own reports. This is by far the most important thing and takes probably 10x more time than the others combined. Read through them carefully, see how they change from one year to another etc.
3. Seeking Alpha and similar websites. Not so much to see what people think but more to read through their points and see if I haven't missed something. So not listening to them saying "buy this because xyz" but more along the lines of reading and noticing them bringing up a point/statistic/number that I didn't pay much attention to. Then I can go back to the reports and see what I think about this particular statistic/number/whatever.