Problem
Economic analysis, industry analysis, and corporate analysis are the three basic components of fundamental analysis.
A. Examine sales, gross profit, and net profit trends over the last five years.
B. Examine the developments in gross profit margin and net profit margin over the last five years.
C. Peer comparison-to compare stocks and identify good companies in the same industry.
D. Valuable financial measures include the price-to-earnings ratio (P/E), earnings per share (EPS), return on equity (ROE), dividend payment, and dividend yield.
E. Look for catalysts, which are any factors that cause dramatic changes in stock price or trends and have an impact on future earnings growth, such as a company announcement about a major project development, a production line expansion, a special dividend payment, a merger and acquisition, or government policies.