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November 7, 2021

*Disclaimer: This blog post is not a financial advice, nor connected with a recommendation to buy or sell shares, but an educational article for those who are interested to know about investing in the stock market, written by contributor and finance advisor.

How to analyse if a stock is a good buy?

You are new to investing and want to buy stocks. Where to start? You’re thinking of buying Apple, Microsoft, Amazon – all the big names who have proved to be stable assets. In 1982, The New York Times cautioned against investing in hyped-up tech companies. One of them was Apple. Less they knew that Apple stocks would go through the roof.

No matter which stocks you buy, it is important to do your research first. Therefore, this article deals with fundamental analysis (no technical analysis) and is aimed to give beginners an idea how they can research a company.

There is basically a 3-step process to decide if a stock is worth investing in or not. These steps contain both the qualitative and quantitative analysis on three levels. When you as an investor are completely unfamiliar with a share, you often collect both quantitative and qualitative information in phases.

The qualitative analysis: which consists of a substantive piece of research that is not measurable.

The quantitative analysis: which consists of hard figures that are measurable, such as turnover and profit.

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