As a beginner in the stock market, knowing how to research stocks like a pro will definitely be a useful skill to develop right now. This is especially so, as, on Wall Street, information is power, and investment professionals have a reputation for being the most knowledgeable. But what if you aren’t a pro? Individual investors, on the other hand, may still benefit from many of the top strategies used by the experts and transform some of their own expertise into actual investment success.
Individual investors have numerous benefits over large institutional investors, including the capacity to invest for the long term and purchase out-of-the-way hidden gems. They can, however, use the information to identify certain potentially high-flying stocks. You can trade these on financial markets for free, using the Bitcoin prime app.
Here are a few of the finest techniques for private investors to study stocks and get a competitive advantage over their professional competitors, including one strategy they can use to keep more of those profits.
5 Ways to Research Stocks Like a Pro
Here are five ways used by experts to determine what’s actually going on in the market. These approaches often take a bit more effort than just viewing the figures on a computer or balance sheet, but you may learn a lot more that way.
1. Make Use of a Stock Screener
For investors looking for fresh ideas, a stock screener is a fantastic place to start. If you’re a value investor, a decent stock screener can help you identify stocks that are reaching 52-week lows, or new highs if you’re searching for momentum stocks that might continue their trend.
This information may be combined with other financial facts provided in the screener, such as a company’s sales growth, profit margins, debt, and many more. You should seek a high-quality screener to receive incredibly detailed – and always up-to-date – information.
Stock screeners are available at some of the largest brokers, but you may want to shop around for one that best meets your specific needs and approach.
2. Consult with Management Teams
Individual investors may believe that management teams are off-limits to them, although this is not always the case. Sure, Facebook CEO Mark Zuckerberg is unlikely to answer your call, but at smaller organizations where executives will interact with present or prospective employees, you have a real chance to ask questions.
You’ll want to prepare appropriate questions that demonstrate your knowledge of the industry, and this may be an opportunity to ask insiders about the finer nuances of the firm. Even if you can’t reach the top brass, you may contact a public company’s investor relations department. IR, as it is called, can provide you with financial information or perspective on a press release, among other things.
It might also be beneficial to question a management team which other organizations in the market they admire the most and why. This line of enquiry might give you a solid idea of which competitors are worth studying – and perhaps even investing in.
3. Conduct Your Own In-Person Research
Getting out from behind the desk might be a terrific approach to find out what’s going on before it becomes a major issue. This advise is from none other than investing legend, Peter Lynch, who suggests monitoring for new trends arising among friends, whether it’s a new product or service.
Have you heard of a fantastic new eatery in the neighbourhood? Examine it for yourself to discover what you like and whether its operation is seamless. Is your neighbor interested in a new technological device? See for yourself what it’s all about – and then decide whether the firm is worth investing in. (Are you a first-time investor? Here’s how to start investing in stocks.)
This method is excellent for discovering a hot new consumer brand, particularly in the restaurant or retail sectors. Foodies might have readily identified future high-fliers like Chipotle and Panera before they became popular brands. Even if investors did not get in at the bottom, many eateries had years of enticing growth ahead of them after they were “discovered.”
4. Perform Your Own Channel Checks
You can perform certain “channel checks,” particularly for consumer or retail businesses, according to Wall Street analysts. A channel check is a fancy term for determining how much merchandise is going through the system.
A channel check can provide you with significant information about what’s going on right now before it appears in the reported financial statements in three or six months.
A channel check for the pros can entail contacting up suppliers and customers of a potential investment to determine how much business the firm is doing. Individual investors can do a lot of the same thing with consumer brands, asking questions like:
- Is that new product receiving shelf space at your local grocery store?
- Is the product receiving more or less space over time?
- Is the parking lot of that trendy new chain restaurant or retail store becoming even more crowded?
- Or is it possible that the restaurant is becoming less packed, or that it is receiving negative feedback?
You can perform your own channel checks to identify patterns that may not yet be visible in the findings.
5. Sign Up for a Newsletter
An investing newsletter is a terrific resource for amateur investors, and it’s a strategy that professional investors utilize as well, but the two types of newsletters often focus on quite different types of analysis. Nonetheless, because the market is so huge, a good newsletter can assist individual investors locate and assess attractive investment possibilities, as well as provide them with a broader perspective.
Wall Street investors may appear to be omniscient, yet they outsource much of their research to external parties. Individuals can do the same thing, but they may have an edge in that they can invest in tiny, high-growth enterprises that large investors cannot touch.
Plus, you may have the added advantage of bouncing good stock ideas off the newsletter pros.
Look for a reputable newsletter company with a long track record and a history of treating subscribers well. In some cases you can find good newsletters for a few hundred dollars a year.
And there you have it! Use these 5 approaches and you’ll be in tune with the markets, researching stocks like a pro. You can always drop your thoughts and questions in the comments section below. Thanks for your time!