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I’m going to do a thread on “DD”. Due diligence is everything about investing. There’s no wrong way to do DD, but I’m going to show a few things I do in order to finding a company that I believe in. Also mix in what others do as well!
You should consider a variety of factors when doing DD on a stock, including company capitalization, revenue, valuations, competitors, management, and risks.
By taking the time to perform DD on a stock before making a purchase, you'll be better equipped to make a decision.
By taking the time to perform DD on a stock before making a purchase, you'll be better equipped to make a decision.
Financial analysis- historical & future income statement analysis, balance sheet analysis, cash flow analysis. The goal is to determine the value of a stock which you can then compare the actual trading price of a stock and determine wether it is under or over valued.
Strength or weakness of a company. Questions you need to ask yourself include: does the company have a durable competitive advantage? how intense is the competitive rivalry in its field? Is the underlying sector growing and if not, can the company still take advantage.
And of course “MANAGEMENT” a good management team will very often find a way to outperform and take the company in the right direction even in challenging times and market conditions. Management is very very important to me personally.
Okay, so one of my main things is SEC filings. I constantly am reading them and when I’m looking at a company I look for 10-k’s and 10-Q’s
10-k, Here you can review a company’s balance sheet, its sources of income and how it handles its cash, and its revenues and expenses.
10-k, Here you can review a company’s balance sheet, its sources of income and how it handles its cash, and its revenues and expenses.
10-Q, update on operations and financial results.
Remember to focus on, net income, revenue, earning per share, price earnings ratio, and return on equity. It’s a lot but, penny stocks are nothing to play with.
Remember to focus on, net income, revenue, earning per share, price earnings ratio, and return on equity. It’s a lot but, penny stocks are nothing to play with.
ALSO, always think about “What could go wrong”.. like for example the Cornovirus. I know once it happened I liquidated and only focused on plays that could benefit from it.
And if you have more questions please DM me, I try and get back to everyone! I enjoy answering questions!
