Best Way To Perform Fundamental Analysis For Stocks

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If you are searching for the Procedure to perform fundamental analysis for stocks.

You are on the right page!

Here in this article, I included my method of how I do fundamental analysis for stocks.

Hello, Traders and Investors welcome to “”. Here I explained how to do fundamental analysis for stocks.

If you’re a beginner in the stock market, then it’s very important for you to understand the importance of fundamental analysis for shares in the stock market investment.

And how to do a fundamental analysis of shares to avoid losses in the stock market.

You can use any stock screener to perform a fundamental analysis of stocks.

The stock screener will simplify the process of fundamental analysis of shares.

What is Fundamental Analysis?

What Is Fundamental Analysis In Stock Market?

Fundamental analysis is the analysis of the valuation and future growth of the company/Industries.

This type of analysis helps to identify the Revenue growth, Future demand for product/services, Management quality, Micro and Macro factors which affect company/Industries growth.

Fundamental analysis is mostly followed by Investor who invests in stock for the long-term.

Fundamental analysis is equally important as technical analysis.

Note:- The Fundamental analysis is mostly used for stocks, But You can use fundamental analysis for any securities/bonds/commodities.

Types of Fundamental Analysis.

Types of Fundamental Analysis.

Fundamental analysis is a basic analysis that helps you to understand the current situation of the company and future growth potential.

Fundamental analysis is divided into two types:-

  • Quantitative Analysis
  • Qualitative Analysis

Let check in detail the Procedure Of Fundamental Analysis of shares using all these steps.

Procedure To Do Fundamental Analysis For Stocks

Procedure To Do Fundamental Analysis For Stocks.

Every investor has their own way of analysis which they developed according to their experience.

Here I explained the strategy of fundamental analysis which I do to find perfect fundamentally strong stocks.

Which I’m learned from my experiments.

If you follow all these steps carefully, then I can ensure you, the chances of losses in the stock market will be reduced.

Companies can manipulate some data to confuse investors, but they can’t manipulate all data.

So, If you do a fundamental analysis for stocks by following all these methods, you can easily identify these types of companies.

Investing in stocks using fundamental analysis will give multiple returns in the future, It’s mean these stocks have the potential to become Multibagger stock.

This article gives you a complete solution to how to do fundamental analysis for stocks?

How To Do Quantitative Analysis Of Stocks?

How To Do Quantitative Analysis Of Stocks?

Quantitative analysis is measured in numerical terms or the study of financial statements of companies to find financially strong shares.

We have to consider the below points when doing a quantitative analysis of stocks.

Sl No.Thinks To Consider For Quantitative Analysis
1EPS (Earning per share)
2PEG Ratio
3Net Sale
4ROIC (Return on invested capital)
5Positive Net Operative Cash Flow
6Growing Book Value per share
7Growing or Stable Margins

EPS (Earning per share):- Earning per share represents the profit company makes on each share.

Earning per share should be consistently increasing. EPS growth of over 15%-20% change is good for the company.

PEG Ratio:- A stock with a PEG ratio less than 1 is good, as it’s valued due to its future earnings growth.

Net Sale:- Net sales should be consistently increasing. Increasing sales show the company is doing good at acquiring new customers.

Higher sales will turn into higher profits. Steadily increasing sales is good.

ROIC (Return on invested capital):- ROIC should be greater than 15% compounded.

High ROIC shows the company is using funds from profits effectively. An efficient company will use less capital to make more investor benefits.

It should be compared to a company’s cost of capital to determine whether the company is creating value.

Positive Net Operative Cash Flow:- Net operating cash flow is the actual cash generated by a company from its business.

Positive operating cash flow shows the company is making enough money from its day-to-day activities.

It doesn’t have to rely on outside funds to run the daily business.

Struggling companies may show significant positive investing cash flow from the sale of assets to cover operations and debt repayments.

Growing Book Value per share:- Growing book value per share means the net assets/value of the company is increasing.

Assets like real estate. Price/book value is used for comparing shares with similar growth.

In the case of demerger/asset sale, investors will get the benefit.

Growing or Stable Margins:- Margins represent what percentage of the sale is being done as profits.

Increasing NPM/OPM is a good sign. Multibagger at the start, but they improve it.

Margins can be relative to a sector. Some have high. Some have low.

Margins indicate the efficiency of business medium sales of high margin will give good money.

It’s perfectly acceptable to have low-profit margins with rapid inventory turnover.

How To Do Qualitative Analysis Of Socks?

How To Do Qualitative Analysis Of Socks?

Qualitative Analysis:- Qualitative Analysis is a quality analysis of Company Management, Business model, Checking future demand for company products/services, Competition in business, etc.

We have to consider the below points when doing a qualitative analysis of stocks.

Sl No. Thinks To Consider For Qualitative Analysis
1Competitive Moat
2Decreasing or Low Debt
3Promoter Quality

Competitive Moat:- Moat prevents competition, maintains sales and growth.

Decreasing or Low Debt:- High Debt is poison, Interest cost may kill the business. So, always choose Low debt to equity ratio.

Promoter Quality:- Promoter quality is very important, An excellent transparent promoter will take decisions only in favor of investors.

By following fundamental analysis, You can find stock having the potential to become Multibagger.

There are lots of things included in the fundamental analysis. The above are some main points, Which consider during fundamental analysis for stocks.

FAQ On Procedure Of Fundamental Analysis For Stocks.

What Are The Types Of Fundamental Analysis?

There are two types of fundamental analyses done by investors during the stock selection.
1. Quantitative Analysis.
2. Qualitative Analysis.
If you combined these methods you will get the best result.

Why Fundamental Analysis Is Used?

Fundamental analysis is mainly used by long-term investors to identify the stock’s future potential and stock price valuation.

What Is The Difference Between Technical And Fundamental Analysis?

Fundamental analysis is used to identify the stock potential to grow in the future and understand the company management, it’s mainly used by investors and Technical analysis is helped to identify the best entry-level of stocks and it’s mainly used by short-term investors.

I hope now you understand the how to do fundamental analysis for stocks of shares. If anyone has any queries or suggestion please ask in the comment box.

1 Comment

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