| How to Research an Investment |
Learn how to start investigating your own investment opportunities
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Many people are ready to take the plunge and start researching their own investments. The problem? They don't know where to begin. In this article, we're going to cover the following research basics:
- The ticker symbol: What it is and how you find it
- Finding out how much a stock costs, the P/E, etc.
- Obtaining annual reports, SEC filings, and other financial documents
- Learning if the company offers a DRIP or direct purchase plan
The ticker symbol: What it is and how you find it
The ticker symbol is a combination of letters that represent a particular stock on an exchange. For instance, stocks that are traded on the Nasdaq have four letter ticker symbols that identify each security. Microsoft is MSFT, Cisco is CSCO, etc.
Before you can get a stock quote [the current price of one share of a company] you have to know the ticker symbol. The first thing to do is to go to a page that offers free stock quotes. About offers such a page at http://quotes.about.com. Once there, type in a keyword that describes the company [for example, if you are searching for Coca Cola but don't know the stock symbol, type in "Coca Cola"] After pressing the "Quote" button a list of possible ticker symbols come up.
Find out how much a stock costs, the P/E Ratio, etc.Once you know the ticker symbol, you can go back to the quotes page at About or any other place on the Internet, and type it in. This will bring up information such as the current market price, the price-to-earnings ratio, and charts detailing the price history for the past several years. See diagram above for a breakdown of how to read this information.
Obtaining annual reports, SEC filings, and other financial documents The Internet is perhaps the greatest source of financial information. Better yet, almost all of it is free. One of the best resources is Free Edgar, a database of annual reports and SEC filings. It has been awarded the Investing for Beginners "Best of the Net" distinction and definitely is where you should start if you are wanting to do in-depth analysis of a company. All of the links in the Government Filings section are dedicated to sites that offer the tax documents, etc. of public corporations. If what you're looking for isn't at Free Edgar, I recommend you check out the government section. Learning if a company offers a DRIP or Direct Stock Purchase PlanIf you want to find out if a company offers a Dividend Reinvestment or Direct Stock Purchase Plan, check out Equiserve. It is one of the largest directories of companies that offer such plans. You can even request information be sent to you in the mail. Drip Central has articles, a directory of companies, and various other services that can help you learn about dividend reinvestment.
