💡 Key Takeaways
📈 Fundamental Analysis: Focuses on financial health, revenue growth, and valuation ratios.
📊 Technical Analysis: Uses price charts and market trends to forecast future movements.
💰 Balanced Approach: Combine both methods for a clearer picture of stock potential.
🧠 Smart Investing: Avoid hype, stay diversified, and evaluate long-term performance.
🧾 Overview
- Stock analysis helps identify undervalued opportunities and avoid risky picks
- Combines financial metrics, market context, and business evaluation
- Aims to balance risk and reward through informed decision-making
- Essential for both short-term traders and long-term investors
📊 Key Metrics for Stock Analysis
- Price-to-Earnings (P/E) Ratio: Compares market price to company earnings — lower may indicate value.
- Price-to-Book (P/B) Ratio: Measures how the stock trades relative to book value.
- Dividend Yield: Shows annual dividends as a % of stock price — higher = income potential.
- Earnings Growth: Indicates company’s historical or projected profit growth.
- Debt-to-Equity Ratio: Evaluates financial leverage and balance sheet stability.
- Free Cash Flow (FCF): Cash left after expenses — a sign of strong financial health.
| Metric | Purpose | Ideal Trend |
|---|---|---|
| P/E Ratio | Valuation vs. earnings | Lower than industry peers |
| P/B Ratio | Market value vs. book value | Below 1.5–2 (value range) |
| Dividend Yield | Income return from dividends | Steady or increasing |
| Debt-to-Equity | Company leverage level | Lower = safer |
| Free Cash Flow | Available capital for growth | Positive and growing |
🧠 Fundamental vs. Technical Analysis
-
Fundamental Analysis:
- Examines company financials, assets, and market position
- Focuses on intrinsic value and long-term growth
- Ideal for buy-and-hold investors
-
Technical Analysis:
- Studies charts, price trends, and trading volume
- Aims to predict short-term movements
- Commonly used by active traders
🪜 Steps to Analyze Stocks
- 1️⃣ Review Financials: Check income statement, balance sheet, and cash flow.
- 2️⃣ Compare Industry Benchmarks: Measure performance vs. competitors.
- 3️⃣ Evaluate Management: Strong leadership signals reliability and innovation.
- 4️⃣ Assess Market Conditions: Broader economy impacts stock performance.
- 5️⃣ Monitor News & Sentiment: Stay updated on trends and announcements.