Chapter 9

Assessing a Company’s Stock: Six Tried-and-True Steps


Bullet Getting familiar with the company you want to swing trade

Bullet Examining its financial stability and earnings and sales data for clues to the bigger picture

Bullet Seeing how the competition’s share prices measure up — relatively speaking

Analyzing a company is kind of like going grocery shopping without a shopping list. You can go to the store and look around for what you want, but without having something in mind, you spend a great deal of time walking through aisles trying to think whether you need more of this or more of that. Taking a list along is much more efficient. You know what you need to get and are less likely to be swayed by impulse buys scattered throughout the store.

In this chapter, I clue you in to the Six Step Dance. Consider it your grocery list of what to look for when analyzing a stock you want to buy or sell. These six efficient, reliable steps aren’t set in stone. I didn’t pick them up from some secret society that holds the keys to the “right” way to evaluate companies. Instead, I offer you the process I use when looking at a potential investment and how to tell whether this method of analysis ...

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