Stock Market Analysis – How to Research Stocks

Learn everything you need to know about stock market analysis, how to speculate and make calculated trades based on relevant information.



Trading on the stock market requires a multifaceted approach. Before you can start buying and selling shares, you need to consider the order types, trading strategy, and the investment portfolio you want to build. One of the most important aspects of trading is stock market analysis.

Investors use earnings reports and other financial data, broadly called fundamental analysis, to research stocks and look for opportunities within the markets. Unlike technical analysis, which looks for patterns in price movements by assessing price indicators and volume, fundamental analysis looks into financial statements and other company data and aims to estimate its worth based on certain metrics such as revenues, profits, cash flows etc.

The Two Basic Approaches

There are two basic approaches to stock market analysis: top-down and bottom-up. The top-down approach looks at macroeconomic factors, taking in the “big picture” of factors affecting the stocks to weigh up decisions. Using a top-down approach, traders concentrate on short-term profits over long-term gain.

The bottom-down approach puts more weight on the fundamentals specific to that stock, for example, their supply chain, financial metrics, and unique services. Bottom-down traders look beyond the current status to seek value in the long-term and make their decisions accordingly.

How To Research Stocks

Everyone is different, and stock market traders are no exception. Specific metrics and data for stock research are favored by traders. Here are four of the most popular markers for stock market analysis:

Price-to-Earnings Ratio:

Also known as the P/E ratio, this is calculated by dividing the stock’s market value per share by its earnings per share. Investors use the P/E ratio to assess the overall value against its competitors and the market as a whole.

Price-to-Earnings Growth Ratio:

The “PEG” is found by dividing the price-to-earnings balance into 12 for the growth rate. The idea is that the company’s past growth rate could determine its future performance. Ideally, you want to find a stock with a value of less than 1.

Earnings Per Share:

Earnings per share or “EPS” is a simple metric to how revenue reaches investors. The higher the EPS of a company, the more valuable the shares.

Return on Equity:

Another standard tool for stock research is to use the “ROE” to find profitable companies. You get the ROE by dividing the net income by the average equity of the shareholders. Traders will look for stocks that are constantly increasing their ROE.

Book Value:

Add up the company’s total assets and subtract any liabilities: you have the book value. Essentially the net asset value of a company, or book value per share, is calculated by dividing the book value by the number of outstanding stock shares.

What Are The Resources For Stock Market Analysis?

When researching what stocks to buy, there are endless resources, from websites, forums, and books. Many traders also seek professional opinions from stock market analysts before making their decisions. The broker you use can play an essential part in your decision-making process. Find a broker who will arm you with a suitable suite of data analysis tools to decide how to trade the market. Many traders choose TradeOr for its integrated tools ChartIQ and TradingView. Both software programs are designed to help you with your stock research and find market opportunities.


Stock market analysis can be overwhelming at first, and rightly so. There are many potential methods, charts, reports, and price projections to consider when valuing stocks. Choose one approach that suits your trading style.

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