Markets

Step 4: Find an Expert Opinion

By Katy Marquardt, Staff Writer

From Kiplinger's Personal Finance magazine, January 2008

Collecting financial information on a com­pany is easy, thanks to sites, such as Yahoo Finance, that put balance sheets and income statements at your fingertips. But this raw data requires some degree of analysis. For example, knowing a company's price-to-book-value ratio is useful only if you understand the underlying concept.

Of course, you could pay a professional to do the heavy lifting. Full-service brokerage houses, which charge clients commissions and other fees, produce a lot of research and analysis. But you can also obtain reports from independent outfits, such as Morningstar (www.morningstar.com; $145 per year) and Value Line (www.valueline.com; $598 per year), or through discount brokers. A more cost-effective option is to find news stories that summarize analysts' reports on your stock at sites such as Google Finance, Yahoo Finance and MarketWatch. (Another plus: News stories typically decipher analysts' jargon.)

A good source for analysts' rating changes is the "Calendars" section of Briefing.com, which also lists stock splits and earnings release dates. In addition, just as many companies forecast earnings expectations for the coming quarter or year (or both), analysts calculate their own profit estimates. Numbers from all the analysts who follow a stock are combined to produce average estimates, which you can find on Yahoo Finance. The site also lists historical estimates and revisions of average estimates. "An easy way to measure whether things are still looking bullish is to follow the revisions," says Rotblut. "If analysts are consistently revising their estimates, that's usually the first sign that something is changing."

Step 5: Become an Active Participant

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