What research do you do before investing?

Morning all,

Obviously everyone is encouraged to do their own research before investing in a stock, and rightfully so. But for my own education, what research do you actually carry out?

Currently, I’m:

  • Using tools like Simply Wall.St
  • Searching Google for recent news stories directly related to the business to get a clear understanding of recent events
  • Visiting the company’s investor relations page (if they have one)

If feels like I could do more though. So, it would be good to understand how I could improve my research or just get a better understanding of the insights everyone else generates before putting their money into a stock or fund.

So any thoughts or learnings would be really appreciated.

Thanks a lot in advance!

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Good idea for a thread - following as I feel I have a lot to learn about research.

I do the same as you at the moment. Mostly I am looking to find the companies debts and assets and revenue to check they have a healthy balance, discover what the company “do” and what competition they have, and if they are the leaders in the field or not if I am investing for growth prospects. If I am investing for dividend purposes I’ll also use tools such as dividendmax & justetf to check dividend history & growth.

Like you said, I too feel theres more I could do, and want to learn.

Practically no research done. I am investing 100% of my funds in Vanguard ETFs, like VEVE, VAGP and VFEM.

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This might help:

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I find myself using:

Morningstar
Simplysafedividends
Yahoo.finance
Plus following a couple of former analysts on youtube for any new ideas

I look at how cool the ticker symbol is and how pretty the logo is.

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Someone’s been reading the Intelligent Investor

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Serious response: I think the platform that you use is largely irrelevant, what metrics do you look at? I look at historic growth and current ratios, usually PE ratio as a starting point. Then I think about do I understand the company and the market.

What metrics do you look at, if any? I am still learning all the different ways to analyse a stock.

My approach is along the following:

  • Download & read 10 years of financials
  • Download & read 10 years of reports (for the management commentary)
  • Some form of fundamental analysis on the financials, typically but not always DCF.
  • Create list of 5 pro’s & con’s for investing
  • Critique management and capital allocation decisions within the reports. Could/should they have done better?
  • Forecast financials forward by 5 years. I typically use a few models here to understand the mins & max. I then check these against analyst forecasts if possible. I’m really interested in the cash flow forecast but Income & Balance is also often needed.
  • Final stage is to do the same for their competitors to understand how this company fits within the market and how high or low quality this company is relative to its peers.

My final scoring system then comes down to one of the following categories:

  • Do not invest
  • Speculative and buy with X% margin of safety
  • Good and buy with Y% margin of safety
  • High quality. Just keep buying

Finally, I review every stock I hold every 3 months to update my research.

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Well when I started I bought the cheapest shares available on Freetrade to have a go at buying shares, that turned out to be Greatland Gold and Eurasia, which have subsequently generated some amazing returns - over doubling, tripling and even 10x initial investments!

From here I have no idea what to do but I feel it can only go one way…

How do you you actually pick the stocks to research though?. Like 70 stocks added recently, I wouldn’t have heard of most and impossible to research all. So how do you decide which ones to start researching.

I chose companies I have heard of, or industries I am familiar with, such as the one I work in or those I have worked in previously for an extended period of time.

I then focus on those I know and possibly have other interests in (example 1: a networking manufacturer I install for most of my customers, example 2: the payment processor my company uses for hundreds of thousands of payments each month).

It’s not perfect, but I feel if I have a vested interest or admiration for the company, it will at least keep me hot on their activity, news, financials, and longevity.

If I’ve run out of those companies or wish to add more, I then look to those companies I do not know but are in industries that interest me or I work in.

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Obviously I then do my research, following much of what was said above.

I also like to for UK companies, check registers of employment tribunals, look up company directors online and see what sort of things they Tweet or post / say, and I also look for a variety of opinion pieces on businesses.

It’s very important for me to feel a company has values and works on them, not just some text on a page online. It makes little difference to the stock performance I have no doubt, but it’s personally important to me.

That’s what drives my investment in many companies.

Apart from what others mentioned, i find checking the company’s competitors rather prudent.

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