Education Archives - Page 2 of 6

Key Takeaways The tools listed are meant to aid you in your research process. Individual company web site and yearly and quarterly reports are great first readings you should start with. Get official company filings from SEC.gov Koyfin is a great tool that can provide financial statement information with graphing abilities for free. SeekingAlpha is an excellent research platform that combines company information with community research, along with premium valuation tools. FastGraphs is a great tool to value large established companies with stable earnings and dividends. Finbox is a great tool to quickly do financial modeling using most popular techniques like Discounted Cash Flow, Comparable Companies, Earnings Power Value, Costs of Capital, and others. If you want to invest in the stock market, you can go three ways. One, use a Robo-advisor service like Acorns, two, invest in a ready portfolio or three, do your own research. In any case, a list of best websites for stock research can help you make the right choices, no matter what direction you choose. The first two (Robo and ready portfolios) will invest in broader markets with the help of ETFs and will greatly depend on the overall market movements. In my recent post, Does the stock market really matter?, I outlined that investors who do their own research don’t necessarily care what the market does. Warren Buffett doesn’t care where S&P500 is at when making investment decisions. To do great research, you could sift through Edgar - SEC.gov | Company Search Page and comb through every single 10Q and 10K (Quarterly and Annual Reports) and figure out things like profit margins, revenue growth, calculate enterprise values, EVEBITDA, PE and a myriad of other ratios. Or you could rely on a service that will aggregate that information and present it in much friendlier manner. In this post, I will list the tools/websites that I use extensively for company research. Most of these tools are available for FREE with premium features available if you want them (Freemium). I will outline what features I pay for. In the beginning, I recommend you try to use free features only. Koyfin - Free Bloomberg Alternative First on my list of the best websites for stock research is Koyfin. Koyfin.com is my favourite Free alternative to insanely expensive Bloomberg Terminal or also expensive ycharts.com. Koyfin is not entirely free. Historical data is limited, and you will need to pay to see it in a table format. That said, I will show you a way I use Koyfin without paying and still getting the information I need. Once you open the platform, you are greeted with a dashboard displaying today’s results of various markets, major indices, commodities, and fixed-income securities. Of course, you can create your dashboards, and you get one free dashboard with a free account. I don’t use dashboards much except adding companies on my watchlist to check their price developments occasionally. Otherwise, I tend to ignore what the market is doing on a specific day or week. How I use Koyfin Where the platform shines, and the way I use it is for individual stock research. It gives me quarterly & annual data of all major balance sheets, income statements & cash flow statement data in an easy-to-read format and with the ability to graph. I won’t get into stock analysis in this post and the information on the three statements you should evaluate, but I will show you how I quickly check key metrics and their change over the years. Quick tip: One quick tip to remember when doing research numbers in the absolute rarely carry anything meaningful. Numbers should always be compared to either historical, % of a larger pie, or compared to competition or industry average. Just looking at a number and saying that’s good or bad is not the best approach. This applies to valuation ratios, KPIs, etc. Check Earnings Growth Let’s take Amazon (AMZN) as an example. On Koyfin, in the search bar, I type Amazon and then go to Income Statement. Because I am using a free version, this is what the result looks like: However, if I click on the little graph icon beside Net Income and then click on Open Graph, I am able to see historical Net Income results for Amazon. I can also use the % Change tool to figure out the % difference between periods quickly. While on the same graph, I then add Data Series like PE, EVEBITDA, EV/Sales, Cash from Operations, Free Cash Flow, etc., and compare them to a series of competitors. SeekingAlpha Premium Where I lack historical data from Koyfin, I substitute it with SeekingAlpha Premium. SeekingAlpha has a free version, but I love the depth of data and tools I get with my yearly subscription. Prices change, and there are occasional discounts, so I recommend you wait for a sale (Boxing Day, Black Friday, Christmas, etc.) but even at a full cost of $20/month, I believe it is worth it. Here is how I use it. Quick access to Transcripts & SEC Filings Using Amazon as an example, type in Amazon in search and go to Transcripts to view and read all Earnings Call Presentations. Reading through earnings calls is a crucial step in my research as I can get a lot of insight out of how top management answers questions, how they see the future, and their general strategy for the company. Okay, this is not some earth-shattering feature, but I love the convenience. Full access to Financials Where you had to pay with Koyfin, SA Premium gives me full view of all statements. I usually change the view to YoY Growth to see how each line item has changed over the years. Earnings Forecast I am cautious with this feature as I never want to trust what analysts are saying blindly, but it is still good to occasionally look at what Wall Street thinks about a particular stock. It is rare for me to invest heavily in a stock that many analysts widely cover. What advantage do I have over 30 or 40 professional CFAs doing in-depth due diligence on a company? None. Besides the fact that many of them end up being wrong, I love finding very poorly covered companies. Check out Can individual investors beat the market? for more information on that. Quick Valuation Snapshot Another feature I like glancing at is Valuation Grade. The feature compares most popular valuation metrics of a stock you are researching to the Sector Median. Here is an example for Amazon: Next step is to dive deeper and compare these metrics to peers rather than sector median. Community Analysis This is the most significant feature of the site and is what SeekingAlpha is all about. Authors submit their analysis and research to the site and get paid for it. Overall it creates an engaging community. Doing your research is crucial, but getting ideas from fellow investors can be immensely valuable. I have found myself doing a deep dive into a company on multiple occasions because the person I admire mentioned it on the platform. On top of that, I find the quality of research to be quite good because many of the authors are not “professional” analysts. A few things to keep in mind: Many authors are not professional analysts, and on occasion, you will find a low-quality piece of content or overly simplistic research that highlights few apparent facts, and that is it. People use the platform to pump their holdings. An article on the site can give poorly covered stock coverage that can lead to more interest. This isn’t inherently a bad thing; in fact, I have found many unknown companies through SA authors, but it puts their motives in question. Are they being overly optimistic because they own the stock? Do not skip reading the comments. Comments allow others to call bullshit on the author’s thinking and approach. SeekingAlpha vs. Motley Fool and others SeekingAlpha is not the only service that hosts community research like this. Another popular site is Fool.com. Now, full disclosure, I don’t know how good content is on it today but even a few years back, the content just did not deliver. Penny stock pump and dumps, low-quality research, short articles would all appear on the site. Motley Fool has since rebranded, and the site does look a lot cleaner. They have also shifted from an advertising revenue approach to promoting their “Advisor” service. I have not tried the service, so I can’t comment on it. At this point, in my personal opinion, SeekingAlpha offers much more value. FastGraphs FastGraphs.com is a neat tool that uses a relatively straightforward approach to evaluating stocks. The tool will not work on all companies, however. In fact, for 70% of the companies I tend to look at, the graph doesn’t work because it doesn’t have enough stable historical information to reproduce the chart. Also, the tool relies on the future earnings from Wall Street analysts and takes their earning projections into the calculation. That means if you are looking at a poorly-covered company, the tool will not work well. Note: I pay for the tool and use it occasionally, but I have a grandfathered rate from many years ago. The pricing has changed since then. FastGraphs was created by Mr. Chuck Carnevale, who I admire very much. I learned a lot of fundamental analysis from him, and many articles on this site reflect his teachings. Check out the demo of the tool and how it works to figure out if this is something for you: Finbox Finbox.com is another tool that I will open from time to time to run popular financial models on a company quickly. It allows me to build Discounted Cashflow instantly, Comparable Companies, Cost of Capital, Historical Financials, Earnings Power Value, and ROE models on stock and quickly compare the current stock price to the fair value. The result is easy to read output that shows me the Upside Range. I run all the models that apply to the company, and generally, if the upside is in the 50-100% range, I will add the company to my watchlist and begin further research. Limitations of stock research tools This is obvious, but no tool is perfect, and no tool will be perfect at predicting whether an investment will be a good one. Every model, every ratio, and every approach has its limitations. P/E ratios can be manipulated and stocks with 300% upside based on Discounted Cashflow end up going bankrupt. That said putting all the tools together with in-depth research has the potential to uncover some truly hidden market gems. With experience, it will be easier and easier but expect losses and stupid mistakes along the way. Happy Investing!