Stock Investment Analysis – A More Detailed Elaboration on How to Buy Stocks

Stock Investment Analysis - A More Detailed Elaboration on How to Buy Stocks

After I have concluded that a specific company complies with my preconditions for selecting undervalued stocks, I will elaborate my stock investment analysis further, to assess the quality of it’s assets, management, financial statements, etc.

Thus far I have created the following pages in this due diligence chapter:

  1. Institutional Ownership AssessmentHow I Assess the Shares Owned by Institutions. In this institutional ownership assessment, I reveal how I assess the change in the institutions’s stock holdings between the two most recent periods.
  2. Management Compensation Analysis2 Ways to Determine if Management’s Compensation and Benefits Are Reasonable. For my management compensation analysis, I calculate various revealing ratio’s to determine if management’s compensation and benefits are reasonable.
    • Management Compensation ComparisonDoes Your Stock’s Management Rewards Itself Excessively. In the management compensation comparison, I compare management’s compensation with the compensation paid at other relevant and similar companies.
    • Management Compensation EvaluationHow Does the Change in Compensation Compare to the Performance of Your Stock’s Share Price. In the management compensation evaluation, I compare the change in management’s compensation to the change in the company’s share price.
  3. Shorting a StockHow I Determine if a Short Squeeze is Likely. In this article about shorting a stock, I have categorized the outcome of the three most important short interest indicators into low risk, neutral and high risk.
  4. Stock Options and WarrantsWhy You Should Pay Attention To the Exercise Price. Read this article to find out which stock options and warrants are in-the-money and how much cash will be raised when these are converted into common shares.

When I concluded that the company does comply with my preconditions, but – based on the further elaboration of my stock investment analyses – I determined that company doesn’t deserve a position in my stock portfolio, I will add it to my stock watchlist, so that I can monitor the developments within that company closely.