Every investment tool has a real value. Forex, for example, depends on the state of the country’s economy or crypto, depending on the technology projects the company is building.
It’s the same with stocks. Stocks are investment tools that are valued based on actual events, such as the financial status of a company. general economic conditions of the country, etc.
as a good investor You should carefully analyze the fundamentals. This is a complete guide on how to analyze stock fundamentals.
What are fundamental stocks?
follow Schwab.comFundamental stock analysis is an attempt to assess the growth of a stock’s value by examining the condition of a company’s business and the overall national economy.
Investors often use stock fundamentals for long-term investments. Because stocks with good fundamentals usually last for decades, they are ideal for long-term investments.
So how to analyze and read the fundamentals of stocks?
How to analyze stock fundamentals
There are three factors that need to be analyzed in looking at good or bad stocks: the performance of each company as measured by various financial indicators. Company’s business performance and the country’s economic condition as a whole.
There are two methods you can use to analyze these three: top-down analysis and bottom-up analysis A top-down analysis first examines the state of a country’s economy. Then analyze the financial status of the company, vice versa, in a bottom-up approach. You need to analyze point 1 first, then points 2 and 3.
In this article, the author explains how to identify good stocks through a top-down analysis method:
1. Collect and analyze macroeconomic data
This macroeconomic data is important in helping to assess the potential of a company in general and answer the question, For example, the Indonesian government’s ban on coal exports in early 2022 has resulted in an increase in Indonesian coal companies’ stock prices or the epidemic that has plagued JCI for several years. month
Some of the macroeconomic variables you can collect are:
- interest rate
- social and political conditions of the country
- economic conditions of the international community
- Government fiscal policies (taxes, subsidies, etc.)
You can get the data for the first 3 variables from the official website of the Central Statistics Agency while the last three variables can be obtained from economic news sites like Bloomberg, Yahoo Finance, CNBC etc. Good trading application. It often brings to you selected economic news that you can read.
If collecting data, how will it be analyzed? goodIn direct analysis of the six variables above, A comprehensive understanding of, for example, what inflation is and its impact on investment is required. Or how can the country’s poor social and political conditions affect investment?
If you don’t understand and don’t have time to learn. You can use the services of analysts from the securities you use or third-party analysts. However, of course, there are additional costs.
2. Sectoral Analysis
Sectoral analysis is an analysis that compares a company’s performance to other companies. Those working in the same field or companies in a certain business with the overall economy. For example, food and beverage manufacturing companies and retail supermarket companies are included in the category. Fast moving consumer goods (FMCG).
IDX currently divides card issuers into: 12 business sectors that is:
- energy sector
- Raw material sector.
- primary consumer sector
- non-major consumer sector
- Health sector.
- financial sector.
- Real estate and real estate sector
- industrial sector
- technology sector
- Infrastructure sector
- transport and logistics sector
- There is a list of investment sectors.
In addition to dividing the company into the 12 business categories above, IDX has also created sectoral indices such as IDXEnergy, IDXBasic, and others. with JCI as a whole and which company is the best in their field
You can get index information from the official website of the Indonesian Stock Exchange. You can also find important news about relevant industries on the Internet. You can use free stock screening app This will help select additional issuers.
3. Company personal financial analysis
The final aspect of a good fundamental analysis of a good but no less important stock is the individual financial and management analysis of a company. This information will be very useful in Determine the fair price of the stock want to buy.
There are three main ingredients that you will need to analyze this:
- Company’s quarterly financial reports
- Company annual report along with audited financial statements
- Important news about the company
a lot now stock analysis app It combines the three main ingredients of the fundamental analysis above.
If all three materials have been collected It’s time to analyze the financial and administrative condition of the company. How to:
- Read the company’s financial statements.
- Gather important information such as total assets, total capital, total liabilities, income, profit, etc. from the company’s financial statements over time.
- Use these key information to calculate the financial indicators of companies such as: ROE, ROA, DER, P/E ratio, PEG ratio and so on
- Interpret the results of your analysis. To interpret these various financial indicators, a comprehensive understanding of each variable is required, so you need to learn how to read the financial statements well and how to interpret each of the above indicators.
- After that, you can compare the results of the financial analysis you have done for one company with others. involved in the same sector
for management You can assess the company’s performance by asking the following questions:
- How is the company’s business development?/Is there a new product?
- Who is the director and director in the company? And what are the abilities?
- How does the company deal with the crisis?
- How does the company market their products?
Most of the answers to these questions can be found in the company’s annual reports and Internet news releases. This aspect of management is important because, of course, you don’t want the company you invest in to be led by people who are incompetent in their field, do you?
That’s a complete guide on how to analyze a company’s fundamentals. So what are you waiting for? Instantly invest in your version of good fundamental stocks.