Evaluating Stocks for Investment

What does is mean when pundits say stocks are cheap (or expensive)?

Investing in stocks is about looking into th

Fundamental analysis relies on several tools to give investors an accurate picture of the financial health of a company and how the market values the stock.

Companies that have extra cash can invest it in other companies or return some to stockholders.

A stock's yield is helpful in comparing two or more stocks as buy opportunities.

Globalization means you have the opportunity to invest in booming foreign economies through U.S. stocks.

During a slow-growth economy, investors need to adopt new strategies to meet financial goals.

How did Apple come from the brink of extinction to become the largest tech company in the U.S.?

Earnings per share (EPS) is an important ratio in evaluating a stock and it comes in several variations that may be helpful.

The SEC provides stock investors with a wealth of information.

Stock sectors offer investors the opportunity to focus on a particular industry group that may profit from upcoming economic changes.

The yield curve is an important indicator for stock investors, but it is not the only factor to consider.

Thanks to globalization, foreign sales information is becoming more important to stock investors.

Cash is the life-blood of a company and it is important to learn about cash flow. However, it is also important this be placed in context.

When a personal scandal rocks the executive suite, it seldom has long-term consequences on stock prices, however a bad choice in company focus can be fatal.

Key an eye on interest rates and employment numbers

Be careful when investing is exotic securities - don't invest in anything you don't understand.

Defensive stocks provide a measure of stability in a volatile economy.

Companies that can consistently produce more winning ideas than losing ideas is worth owning.

Some foolish decisions are when you buy and other foolish decisions are when you don't buy. It's hard to know which is correct for any opportunity.

Earnings season is a quarterly show and tell that helps investors adjust their expectations.

The margin of error is a factor you include in your calculations for determining at what price to buy. It provides some protection against the unknown and any calculation errors.

Cash flow to debt ratio is helpful in determining the financial strength (or weakness) of a company.

Investing in stocks is not as easy as it should be. Knowing when to get in and when to get out is more about risk tolerance than timing.

The stock markets move in mysterious ways (or so it seems). There are some indicators known as market internals that can help you spot changes in direction.

The TICK Index is a simple calculation that gives you a quick look at whether the mood of the market is to buy or to sell.

The TIKI in a market internal that looks at the difference between rising and falling Dow stocks to gauge market sentiment.

You can make better investment decisions if you know (or have a strong indication) when prices will reverse direction. The TRIN Index provides this information.

Health care reform could create some interesting stock investment possibilities.

The cash ratio tells you how easily a company can weather a difficult economy.

When virtually all stocks appear to be bargains during a bear market, it is important to identify those stocks of value.

One way to measure how well a company is doing involves comparing its financial ratios to peers and industry sector.

Earnings reports during an economic crisis may be lower than in the past, but look for the reasons. There may be more than just a bad economy at play.

Falling inventories can set the stage for a recovery since businesses need inventory to sell.

Identifying investing opportunities in a down market requires some research to help focus your selection process.

Many companies can make money in a good economy, but not all of them have a business model that will survive a downturn. Stock investors must look for companies that can survive a downturn.

A stock's P/E is one of the most important tools investors use. Use it wisely.

Bouncing stock prices don't paint an accurate picture of a company's worth. Fundamentals are still the most important consideration in evaluating a stock.

The VIX is often called the fear index because is measures how concerned or uncertain investors are about the future direction of the market.

A rising or falling market does not take all stocks the same direction or at the same speed. Stock sectors are groupings of like companies.

An economic moat protects a company from competitors by creating obstacles for entry into the market.

Much can happen to companies in a volatile market. Don't use old information to analyze a company.

It is easy to become excited about a new idea or technology, but investing in companies with no history of making money is risky.

A good company can be a risky investment if you pay too much for it. The P/E is a good tool for a rough idea about a stock's value.

Free cash flow is one of the most important numbers you need to know about a stock. It will help you determine a fair price for the company's stock.

Earnings per share or EPS is one way to compare companies, but it does not tell you about market value.

Return on Assets is an important number for investors to know when considering a stock. It provides a measure of efficiency.

The first step in picking a stock is to determine where you need to diversify your portfolio.

Investors often turn to safe stock sectors such as utilities during difficult economic times, but not every company in safe sectors are good investments.

You can find growth stocks in almost any market, but you may have to look harder in some markets than others.

Companies that show a consistent growth in earnings make attractive investment candidates for stock investors.

Research and development is important to every company, since that's where new products and services are created.

The Price to Earnings Ratio is one of the most important numbers analysts look at to understand how the market values a stock.

Beating the market with your stock investments may not be the best goal for your portfolio.

PEG ratio provides investors a way to calculate how much future earnings growth is going to cost based on the stock's P/E and projected earnings growth rate.

The Price to Sales ratio is a tool for evaluating companies with no earnings that looks at how the market values the company's sales.

The Price to Book ratio is a way to determine how the market values the book value of a company based on the current market price.

The dividend payout ratio looks at what percentage of a company's earnings are paid out to shareholders in the form of dividends.

You can use a few simple calculations to determine how your investments are performing and what they are returning.

Dividend Yield tells you what percentage return a company pays out in the form of dividends.

Companies with heavy debt loads can be at risk in markets where interest rates are rising. Here's how to evaluate stocks for debt.

The Annual Compound Growth Rate of your investments is important because it takes into account the time value of money as well as price changes.

Too much debt can make a company vulnerable to rising interest rates. Here are two tools to help you evaluate stocks for too much debt.

Book value of a company is the assets minus liabilities.

There are three main influences on a stock's price: business fundamentals, its sector or industry, and market conditions.

Great stocks and great companies have several traits that distinguish them from the rest of the pack.

The short-interest ratio tells you whether your stock is an active target of short sellers

Return on equity tells investors how efficiently a company is using its assets to generate earnings.

Cash is vital to a company's health and its ability to generate cash can be used to see if the market under or over-values the stock. For many, these metrics are better than P/E for that purpose.

Market cap is more important than per-share price because market cap tells you the value of the company.

Advance/Decline numbers give you a feel for the "breadth" of the market and provide another piece of information in addition to indexes.

Relative strength measures a stock's performance against the rest of the market and is helpful in evaluating investments.

Earnings are the single most important factor in stock evaluation for many investors. Although there are other factors to consider, earnings must be near or at the top of every investor's list of important checkpoints.

The actions of the institutional owners of a stock can tell you something about the quality of the stock - sometimes you can believe it.

Cash flow is an important tool for investors in evaluating stocks for investment.

Changes in interest rates effect stock valuations in a fundamental way by changing the required return.

A stock's beta ratio is a useful tool for measuring risk, but it does have some serious limitations.

Stocks with high dividend yields may be a smart buy, but they may also be a trap. Always check the other fundamentals before making an investment decision.

The sales/price ratio provides a metric for measuring the relative value of a stock's price when compared to industry peers. It is used along with price/earnings ratio.

How well is management making use of the company's resources? The answer can tell you a lot about whether you want to own the stock or not.

Operating cash flow measures how cash is generated in a company and whether the company is taking in more or less than it is spending.

Knowing when to sell a stock is as important as knowing when to buy, but don't sell on false signals.

Jumping into the latest hot investment can be exciting, but don't let your emotions make to take dangerous risks.

There are two prices for a stock that concern long-term investors and they usually aren't the same.

Dividends can provide investors with steady income and their ratios give you important information about the company.

Yield-based evaluation tools can help investors pick stocks that fit their financial goals. The dividend yield tool is one of the most popular.

Investors buy long term earnings and need a way to evaluate companies based on their future earnings.

You can use equity and sales to help evaluate a stock for investment, but don't act on just these two numbers.

The method you use to select a stock for investment can be by the numbers or more subjective.

Mid-cap stocks fall into the gap between large-cap and small-cap stocks in terms of risk and potential growth opportunities.

Large-cap stocks are not always the safe haven investors hope for when the stock market is churning. However, don't overlook small-cap stocks just because they tend to be more risky - sometimes that's where the best return is found.

How does that stock you are considering compare to its peers? You really need to know.

Long-term investors may find a stock's price distorted by speculation, but if you know the intrinsic value of a stock you can make a buy or sell decision.

One of the hardest things an investor in the stock market does is figure out the right price for a stock.

Finding the correct value or price for a company is very difficult. The comparable valuation model may help you get started.

What factors should investors in the stock market look for when analyzing a stock.

The future is unknowable, however investors must do the best they can with assumptions on growth.

Long-term investors buy great companies and hold them until they are no longer great. They buy value, not price.

The stock market premium tells you how much over the return of a risk-free investment you should expect from stocks.