Online Investing

Fundamental analysis is the art and science of examining the fundamental measures of a company to identify its underlying strengths and weaknesses. It is financial Darwinism at work, based on the notion that strong companies will survive—and ...

As the value of a company increases, investors are willing to pay more to own it, so the price of the company's stock increases as well. Investing in growth companies is easier than you might think. Once you know what to look for, growing ...

Insisting on Quality When you invest in companies for the long haul, buying quality is critical. Sure, you might make some fast money buying a dicey company on a hot streak, but it's just as easy to lose most if not all of your origina...

Buying Good Value Low price isn't a green light to buy. Low-quality, slow-growth stocks are dogs no matter how little you pay for them. On the other hand, the best-quality growth stocks can bark as well if you pay too much. By buying quali...

To invest in growth stocks, you must be able to identify growth, which means you must be able to quantify the growth companies have generated in the past. You can calculate the total percentage change in a company's price, earnings per sha...

Whether you use a formula or a built-in Excel function to calculate CAGR, a spreadsheet makes the calculations easy. 4.6.1 Estimating Compounded Annual Growth Rates Example 4-5 shows the formula for estimating CAGR when you have th...

The P/E ratio compares the current price of a stock to the amount of money the company has earned. One interpretation of the P/E ratio is the measure of how much investors are willing to pay for each dollar of earnings the company generates. ...

Although the P/E ratio can help you determine a stock's value, it can sometimes be misleading, particularly for companies that have recently issued a warning about their future earnings. Investors might have bid down the price of the stock ba...

There's no need for a lot of number crunching, though—a handful of ratios can give you a good snapshot of a company's fiscal fitness. 4.9.1 Current Ratio The most common test of a company's financial strength is its current rat...

Management effectiveness ratios compare financial measures from company financial statements to evaluate management performance. Of all the fundamental criteria that long-term investors consider, one of the most important is return on equity ...

It doesn't do any good for a company to own assets, such as factories, inventory, or even cash, if they're not being used to maximum advantage. There are three ratios that investors typically evaluate to measure the efficiency of company mana...

The idea behind this approach is that a company that consistently grows its earnings will eventually see its share price grow as well. Although companies can increase their earnings by selling more goods or services, they also must be mindful o...

For long-term investors, comparing shorter-term financial results can raise red flags about a company's current condition. By comparing recent annual or quarterly results to the same period a year ago, you might receive early warning of a p...

Long-term investors often approach their stock selections with the mantra, "Invest in the best." High-quality, well-managed companies will frequently be the best buy-and-hold investments in your portfolio. By comparing several competitors in ...

How much the stock price increases depends on perception as much as reality. The stock market hates uncertainty, which is why investors usually pay more for companies that pump out consistently increasing earnings. Predictable earnings represen...

And it's equally difficult to be realistic and patient (the cornerstones of successful investing) when the stock market is soaring. By assessing the rational price of a stock and the rational value of your portfolio, you can make sensible...

Some investors are so afraid of losing money that they play it safe, purchasing certificates of deposit or hiding money under the mattress. Unfortunately, no investment is without risk. Even if you hide money in your mattress, it can burn in ...

By investing in growing companies that are managed well, compare favorably to the competition, and are selling at a reasonable price, fundamental investors make money as stock price grows along with company earnings. Fundamental analysis prog...

It's more like they've been microwaved for a few minutes on high rather than baked at 325 degrees until done to perfection. Perhaps the most egregious example of this is Enron, whose saga, along with its master chefs Lay, Skilling, and Fastow...

Fortunately, there are some tools that can help you perform an instant analysis to see whether a stock might fit your portfolio. While none of these tools substitutes for your own in-depth research, they can spark new ideas and point out potent...

The Web offers plenty of free tools as the results from any online search will indicate, but finding tools that are worth something is another matter entirely. However, you can count on someone who volunteers his time teaching investing to offe...

None of the products is perfect. However, each one offers some intriguing views of fundamental measures that might augment your current analysis. Spredgar (http://www.spredgar.com Spredgar is an Excel add-in that combines SEC filing d...

REITs invest in different types of real estate, in which the earnings of the REIT often have more to do with rental and occupancy rates than the interest rates that affect stocks and bonds. Financial planners recommend investing up to 10 percen...

A dollar is a dollar, so how do banks make a profit? By charging a higher interest rate for the money they loan out than they pay for the money that comes in as deposits and by charging fees for the money-related services they offer. Because ...

No matter how good or bad your memory is, a checklist or set of guidelines for your unique approach to analysis will increase the consistency of your stock studies. By evaluating each company in the same way, you can compare companies with co...