The Most Important Stock Fundamentals

You need to have a solid understanding of fundamental analysis in day trading, swing trading, and investing. Today, Tim Bohen walks you through the top five things you should consider when you look at fundamentals. Whether you’re staying under the PDT or looking for a swing trade, this what you gotta know.



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In trading, you're looking to buy a company’s future prospects. A lot of low-priced stocks don’t even have sales. You can't pay employees, rent, or taxes with no sales. Some of these stocks are so speculative, they don't even have a product or service you can buy. So before you buy a stock, look at the balance sheet. The top line is sales.

The bottom line is the profit and loss statement. Start with the sales, subtract all expenses, and this is where you end up — the P&L. You want to see if there’s any money left at the end of the day. And with low-priced stocks, you often find a negative number, even with big sales.

I’d be really cautious about long-term positions in money-losing companies, because there's a good chance they’ll have a stock offering, dilute, or even go bankrupt.

Circling back to sales … is there anything you can actually buy, like a product or a service? And is it something you’d even consider buying yourself? With biotechs, especially low-priced biotechs, you almost never see any type of product or service — these are development-stage companies. They're trying to develop and release that first product.

Say you want a trade you can hold overnight, but there are no sales, big losses, and no products. Those are red flags. And vice versa — if you see a product, and people actually buy it, that’s called a channel check. You see that often in ‘real’ businesses. That's a company you might wanna swing trade or invest in.

You also want to pay attention to the price-to-earnings (P/E) ratio. This breaks down how much money the company makes. With low-priced stocks, you can see some pretty big ratios since these are speculative companies. So when they trade 10–30 times P/E, it's not necessarily a red flag. It’s a sign that there’s some mania involved ... and that's not necessarily a bad thing in the stock market.

But if you’re in a trade and the stock starts to turn on you, check the P/E. This stock may just be coming back to reality, and that's your trigger to sell.

The last thing you should look at ... and this may sound bizarre… is the company’s location and employee count. If it's a sketchy office that employs only two people, it’s likely not worth your time.

#StocksToTrade #StockMarket #FundamentalAnalysis
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*Tim Bohen teaches skills others have used to make money. Most who receive free or paid content will make little or no money because they will not apply the skills being taught. Any results displayed may be exceptional. We do not guarantee any outcome regarding your earnings or income as the factors that impact such results are numerous and uncontrollable.

You can lose money trading stocks. Do not invest money you cannot afford to lose. You understand and agree you will consider the important risk factors in deciding to purchase any of our products or services.

[Stockstotrade]

Have you ever looked up a company on Google Maps and seen some ridiculous office?

[SMWCEnjoirider]

Awesome vid Tim, I know that fundamental analysis is one of my current weak spots when looking for potential trades. Ill definitely be going over this video again and taking notes. Im also getting farther in the Daily Trading Coach and I believe its starting to really click in my brain. As always, thanks a ton!

[andysalo]

Awesome video, I have never looked up a company on google maps, I will in just a minute. Thank you Tim!

[wardosravin]

You didn't mention book value? That is arguably more imoortant than PE is it not?

[bronsonlee]

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[williamsheppe]

No, but I do remember when Elmo was a hot item. Before that it was the Cabbage Patch Dolls.Lol!

[eloygonzalez]

Im surprised that Free Cash Flow was not on the list.