3 Resources/Tips for Researching a Company that you want to Invest in

When looking at stocks, here are a few resources and tips that I use when deciding whether I want to invest or not.

First, the SEC Gov is an extremely resourceful website

There is a feature called “Company Filings,” which allows anyone and everyone to look at all legal documents filing done by the company. This is public information and is free.

Investors can search the company’s name or ticker symbol.

(image is from SEC.Gov Company filing search screen)

I’m going to use Amazon in this example.

(image is from SEC.Gov Company filing for Amazon)

Right away, you can see the documents filed and for which fiscal year it ended.

What I personally like to look at is the 10-K (annual report) and occasionally I’ll sometimes peek at the 10-Q (quarterly report) and 8-K (current report).

There should be a table of contents for each document. Within the documents, I personally like to look for 2 things.

• The first one is reading through the company’s risk factor.

I want to understand the risk factor. It gives me an idea of the performance of the industry and challenges that the company face. This let’s me know if the risk is something I am okay with or not.

• The second one is looking at the financial statements.

Financial statements give a lot of data and can be use for building financial models.

A few metrics on the financial statements that I look for is:

• Revenue, what does revenue look like?
• Cost of revenue, what does cost look like?
• Gross profit, is the company generating profit?
• Research and Development, is the company spending money on growth and expansion?
• Percentage growth year over year, what does this quarter or year look like compare to the same period in previous year?

These are only a few of the metrics, but many people can build financial models by manipulating the financial data.

A second free online resource is looking at investor relations

Let’s continue and use Amazon. This can be done by using Google search and searching for “Amazon Investor Relations”. It should bring up multiple searches with one of them being a link that will route to the company’s investor relations page.

Here, I can look at the company’s annual reports, shareholder letters, quarterly results, SEC filings, press releases, financial briefings and more. This resource is used to look at documents and information that might not be available on the SEC Gov website.

And finally, what I like to do is to research on the growth projection of the industry the company is in.

Amazon is a tech multinational company meaning they do e-commerce, cloud computing, digital streaming and much more. The question I want to ask is, “are these industries growing, will they grow in the next “x” number of years and what might that growth look like?”

I like to look at Statista to have an idea of the growth and projection.

(image is from Statista for E-Commerce sales)

The example chart above is for e-commerce sales, but for each of the industries Amazon is in, they will all have their own different projection charts. As an overall, I want to know from the charts is that it is a growing and expanding industry.

Please keep in mind that there are so many different styles and approaches to investing

For my style, I like to find information on the current performance of the company, the past performances, the risk factors, and the market outlook and projections.

My goal when researching a company is to try to understand what the company is going through and will they grow in the next “x” number of years where “x” is whatever the number of years or time period is for what I plan to invest into the company for. I also like looking at metrics and data so I can build a financial model with it. Finding the data is important because investors can also build financial models to get a better visual and better make estimations and predictions; however, I will be covering building financial models in a future article and not this one.

I hope that the resources I present in this article may be of help when researching a company to invest into.

Please keep in mind that I am not a financial advisor, and this article is not for financial advice and is for entertainment purposes only. I am sharing my approach only and any investment advice should be done with a license financial advisor.