Ways of Making Smart Investment Decisions

Yahoo finance quotes: If you’ve developed an interest in the stock market, you no doubt have a company or two in mind that you’d like to investigate. Through stock quotes, you can look up and analyze the financial health of any publicly traded company. These quotes are snapshots of the company’s stock and how well it is performing on the market. To read stock quotes, you need to find the stock you want and then make sense of the symbols and abbreviations in the stock table.

Yahoo finance quotes

Make note of the current price. The current price is the price of one share at the close of trading the previous day. This price should only be taken as a guideline, because the price will continue to fluctuate even after the market has closed.

  • The price may be listed under the “day last” column of the stock table. It may not have a currently symbol next to it.

Check the 52-week high and low price. The 52-week high and low show you how much the stock has fluctuated. Look for “52W high/low” to gain information helpful in determining the general direction of a stock’s price.

  • Compare the current price of the stock to the 52-week high and low to see if it’s currently sitting closer to the high or closer to the low.

    Yahoo finance quotes

Find the earnings per share (EPS). The EPS is a measure of the current stock price compared to the earnings for the company over the last four fiscal quarters. It is calculated by dividing the net income of the company by the number of outstanding shares. Generally, the higher this number is, the better an investment that stock is.

  • You might see the initials EPS followed by “(ttm).” This stands for “trailing twelve month,” and simply means that the EPS was calculated using the last 12 months’ figures.

Evaluate the price to earnings (P/E ratio). You’ll see a number under “P/E” on a stock table. This represents the stock’s current price divided by the most recent EPS. The P/E can tell you if a stock is overvalued or undervalued.

  • If the P/E ratio is high, investors expect those higher earnings in the future. If the P/E ratio is low, expect less earnings from that stock. Compare P/E ratios among companies in the same sector to find out which stocks are performing the best.

    Yahoo finance quotes

Check the stock’s volume. The volume is the number of shares traded in the most recent session (usually the last day). You also may see an average volume, which is the number of shares traded during a specific period. The length of that period varies among stock price report services.

  • In most cases, you want to avoid stocks with low volume. If the number is particularly low, check the average volume to see if it’s higher or lower than the average.
Find the High/Low column or Range. This column tells you the highest and lowest price at which the stock was traded that day. It gives you an idea of how volatile the stock is. The further apart the numbers are, the more volatile the stock.

Look at the market cap. Market cap, short for market capitalization, is the total value of the company. It is simply the total number of available shares in the company, multiplied by the current stock price.

  • The market cap gives you an idea about the general size of the company. The larger the cap, the more conservative the investment. Startup companies typically have a small cap, and are considered riskier investments.

    Yahoo finance quotes

Find the dividend. Some stocks pay equity directly to investors in the form of dividends. Generally, dividends are a sign of a healthy company, especially if those dividends have been increasing over time.

  • Dividends may be paid monthly, quarterly, once a year, or twice a year. If the dividend column on the stock table is blank or has a dash, that company didn’t pay dividends.
  • In some cases, dividends are reinvested, so each investor gets more stock instead of a cash payout.
  • Try to only invest in companies that have positive dividends.

Compare price to value. The P/E ratio on the stock table can give you a good idea of whether the stock is a bargain. A relatively low P/E, typically under 15, tells you that the stock is selling more cheaply than it’s worth.

  • Check the P/E of competing companies in the same sector. If they’re all similar, that may tell you that the sector as a whole is undervalued. You may want to do some additional research to figure out why that is.
  • A high P/E isn’t necessarily a bad thing if you’re focused on long-term investments. Some stocks have a high P/E because they are expected to grow significantly within the next few years.

    Yahoo finance quotes

Determine whether the company is growing. Generally, if the company’s revenue is increasing, that means the company is growing and it probably is a good investment. Check the company’s revenue as well as its EPS.

  • If the EPS is high, your stocks will have a higher value. The company is potentially a good investment if the EPS has been steadily increasing over time.

Calculate the return on equity (ROE). If you have access to a basic income statement from the company, you can use the ROE to see how efficiently the company is producing income for its shareholders. To calculate, divide the average shareholder’s equity during the past 12 months by the company’s net profit over the same period.

  • The ratio is expressed as a percentage, and can help you determine the overall profitability of owning stock in the company.
  • Look for companies with ROEs that have been increasing for at least the past two years.

    Yahoo finance quotes

Review expert analysis and research. If a stock is performing notably, experts analyze and produce reports on it to help investors. When you read stock quotes online, you’ll often find links to these articles on the same page.

  • On other financial websites, clicking on the name of the company will give you more detailed information about the company’s performance.

Study the company’s reports. All publicly-traded companies produce reports of their finances. Spending time with these reports helps you understand the financial health of the company and decide whether it is a sound investment.

  • In addition to looking at the company’s revenue, look at the relationship between revenue and expenses. A healthy company will grow while controlling costs, so the difference between revenue and expenses, or margin, will increase over time.
  • Also pay attention to how much debt the company has.  If the company is carrying a lot of debt, the price of its stock is likely to be more volatile.

    Yahoo finance quotes

Determine the company’s ticker symbol and stock exchange. Each company has a ticker symbol of three capital letters, assigned by the stock exchange where stock in that company is traded. While they sometimes resemble part of the company’s actual name, they may be completely unrelated.

  • Some publications will list the company’s full name alongside the letters. But for most stock tables and for tickers, you’ll need to know the three-letter symbol.
  • If you’re having a hard time finding the symbol, go to the company’s website. They’ll usually have it listed somewhere with other basic information about the company. You also can find out the stock exchange where that company’s stock is traded.

Use an online financial service. There are numerous websites, both free and paid, that provide stock quotes for stocks traded on the different stock exchanges all over the world. Websites are especially valuable for international stock exchanges.

  • Typically you can find more detailed information about how a stock is performing through an online financial service than you would on television or in a newspaper.

    Yahoo finance quotes

Look it up in the newspaper. Once you know the company’s ticker symbol and stock exchange, you can check the stock quote for that company in any major newspaper. For international stock exchanges, check a financial paper, such as the Financial Times.

  • Newspapers don’t include every company traded on any given stock exchange. But if the company you want to check is a major company, the newspaper likely will include it.

Check the ticker. In stock market lingo, a tick is any up or down movement in the price of a stock, or the market as a whole. Financial news programs and networks have a ticker running along the top or bottom of the screen that displays this information.

  • Most networks color-code each entry green if the stock is trading higher than the previous day, and red if the stock is trading lower than the previous day. If the stock price remains unchanged, the entry will be white or blue.
  • Quotes make it to the ticker based on a number of factors, including the volume of trading in that stock and how much the price has changed. If you’re following a major company or rapidly growing company, you might find information about it on the ticker.
  • The information on the ticker is just a brief glimpse of the stock’s performance. You’ll have to go to a full stock table if you want more in-depth information.

    Yahoo finance quotes

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