THE BASIC FUNDAMENTALS ARE CASH FLOW,RETURN ON ASSETS AND CONSERVATIVE GEARING.FUNDAMENTAL ANALYSIS IS CHALLENGING TASK BECAUSE WE HAVE TO GO THROUGH ALL THE FINANCIAL STATEMENTS TO KNOW WHERE STOCK PRICE IS OVERVALUED OR UNDERVALUED.
WHAT ARE STOCK FUNDAMENTALS?
THEY ARE THE KEY INDICATORS FOR A COMPANY .
FOR EXAMPLE :RETURN ON ASSETS(ROA)
ANALYST LOOK INTO THIS DATA TO INSURE THE EXPECTED PRICE.
KEY FACTORS(POINTS)
FUNDAMENTAL ANALYSIS INVOLVES LOOKING AT THE DATA WHICH IS EXPECTED (FALL OR RISE OF STOCK(SHARES) PRICE.
HOW FUNDAMENTAL ANALYSIS WORKS?
IT FOCUSES ON CREATING A PICTURE OF A COMPANY IDENTIFYING THE FUNDAMENTAL VALUE OF ITS STOCKS(SHARES).AND PURCHASING OR SELLING OF A STOCK ON THAT BASIS.
SOME OF THE INDICATORS ARE AS FOLLOWS
1. CASH FLOW.
2.CONSERVATIVE GEARING
3.HISTORY OF RETENTION
4.THE HEALTH OF CAPITAL MANAGEMENT FOR THE MAXIMIZATION SHARE HOLDERS EARNINGS AND RETURNS.
FUNDAMENTAL ANALYST HAVE A RIGID APPROACH TO ANALYSIZE SHARE OR STOCK PERFORMANCE.THIS INCLUDE COMPANY MANAGEMENT ,REVENUE OR INCOME ,COMPETITOR AS WELL AS ITS GROWTH POSSIBILTY.
PERFORMING FUNDAMENTAL ANALYSIS CAN BE A LOT OF HARD WORK.GOING THROUGH COMPANY’S FINANCIAL STATEMENTS AND ITS FUTURE PERSPECTIVES,INVESTORS CAN LEARN AND EARN ENOUGH TO KNOW THE SHARE PRICE UNDERVALUED OR OVERVALUED.
NOTE:JUST BECAUSE OF THIS ANALYSIS DOES NOT MEAN OR GUARNTEE IT WILL BE SO BECAUSE OF ITS INSTRINSIC VALUE ON UPCOMING DAYS
IF THE MARKET IS IN BULL IT IS EASY FOR INVESTORS TO FOOL THEMSELVES BY FALLING IN THE BULL TRAP.
