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One sentence overview: Picking a stock is like a personal relationship, first you show some interest and if things click you make a commitment.
First, you check out a company when entering the company ticker into Google. The first thing you look for is the stock price. Too high, too low or just right?
What’s next? Well, you can check out how much the stock price has moved since the beginning of the year. What was the stock price during the March correction? How much has it rebounded since March? Just remember, the stock price in the short term does not necessarily represent a true picture of the underlying company. Ultimately, if you are investing for the long term, you check out the company.
A good first place to start investigating a company is Googling the company name with term investor relations. Typically, the top search item is a link to a company’s investor relations page. On the investor relations page, you can read press releases and review financial statements.
If you are concerned their investor relations page may be biased you can always go to the company’s SEC page where they file required documents.
Want to know if the company CEO is respected and the company culture? Go to Google and type in glassdoor and the company name.
Of course you can get a quick overview of the company by Googling the company name followed by wikipedia.
Ultimately, if you are serious about making a commitment to a company, you need to understand their ability to generate net income. If they are a new company, you should examine their ability to generate revenue growth year over year, and how much revenue is being captured as cash.
Do you understand the product/service the company provides? Can you explain their products to someone in one or two sentences? By being able to understand their primary competitive difference, you can look at the company’s competition to evaluate the future prospects of the company.
Investing in a company is a highly personal matter. Did not propose marriage on the first date. Make a small investment to start. As you get to know the company, you can make additional commitments.
Disclaimer: I do not make any formal recommendations for or against a stock, so don’t buy or sell stocks based solely on what you read.
