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Here’s How to Research Stocks

August 26, 2019
magnifying glass with company logos

Tip of the Week

Research a company before buying its stock, using key metrics such as revenue, profits, and the price/earnings ratio.

2 min read

Buying the stocks of companies that interest you is a great way to start investing. But how do you know which companies might be better bets than others? It’s on you to do some research, and to look at some key numbers. Fortunately, that information is readily available.

Tactics and considerations:

It’s important to examine some key numbers to get an idea of how well a company is doing, these include:

Jargon Hack

What is 52-Week Range?

52-Week Range

The highest and lowest price a stock has traded over the course of the previous year.

Find out


In the third quarter of 2019, Acme Co. has $10 million in annual revenue. It reports net income of -$9 million, or a loss. It has a P/E ratio of 5, when the industry average is 20. The stock price is $8, when the 52-week range is between $8 and $50. A quarterly letter from the company’s CEO talks about ongoing litigation related to a faulty product, and a management shakeup that includes the departure of the company’s chief financial officer.

Though it’s important not to judge a company based on a single quarter, given the size of the loss, the low share price, and the CEO letter, something is clearly going on with Acme Co. It might be a good bet to avoid purchasing the company’s stock for now!

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By Stash Team

*This is a hypothetical example and is not representative of any investment.

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This material has been distributed for informational and educational purposes only, represents an assessment of the market environment as of the date of publication, is subject to change without notice, and is not intended as investment, legal, accounting, or tax advice or opinion. Stash assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective.

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