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Saturday, August 14, 2010

3. Examine the recent & historical performance of the Stock

Step-3: Examine the recent & historical performance of the Stock

By performance we mean both operational and financial performance of the company. Take out some time to find out how the company has done in its business over the years. Were there issues with its operations such as labor strike, frequent breakdowns, higher attrition or lagging deadlines? If any company has a history of serious problems, it does not make a good buy because chances are high it may have similar problems again. History is a good predictor of future! It is also extremely important to find out the historical financial performance of the company – growth in revenues, profits (earnings), profit margins, stock price movements etc. Use the following table to understand the stock movement.


You can get these data easily on many websites. Just search for the companies names and fill the above table. However, just don’t make an investment decision based on this table itself. Always go through Step-4 and Step-5 before you decide to invest in them.

Step-4: Perform Competitive Analysis of the Firm with its Competitors


Back - Six Steps to Find the Best Stocks