One of the key differences between individual stock investors and mutual fund investors is understanding how to read and evaluate stocks on an individual basis. Unlike mutual funds, individual stocks can be riskier, so picking the wrong ones could result in significant financial loss.
To evaluate a company’s stock metrics, you can rely on the basic information summarized by major news outlets into concise profiles that are easily accessible and regularly updated. This guide will walk you through stock metrics using Johnson & Johnson as an example, with data from CNN Money. Remember, similar information is available on platforms like Yahoo Finance, Google Finance, MSN Money, and brokerage websites.
Here are key metrics to understand:
– **Ticker**: Represents the stock symbol and trading market.
– **Price**: The current trading price of one share, which changes in real-time during market hours.
– **Today’s Change**: The difference in today’s price compared to yesterday’s closing price, shown in dollars and percentages.
– **52-Week Range**: Highest and lowest stock prices over the last year, indicating potential trends or valuation status.
– **Year-To-Date**: Percentage change in the stock price since January 1st.
– **Chart**: Visual representation of the stock’s price movements, useful for spotting trends.
– **Latest News**: Current news stories about the company that may affect stock price.
Additional key metrics include:
– **Previous Close**: Closing price from the day before.
– **Today’s Open**: Opening price of the stock for the current day.
– **Day’s Range**: The highest and lowest prices of the current trading day.
– **Volume**: Number of shares traded today.
– **Average Volume (3 Months)**: Average daily trading volume over the past three months.
– **Dividend Yield**: Annual dividend payment divided by the current share price, indicating the dividend return percentage.
– **Earnings Growth**: Indicators of past, current, and projected profitability.
– **Revenue Growth**: Total sales and income growth, excluding new expenses.
– **P/E Ratio**: Stock price divided by earnings per share, a measure of what you’re paying for a company’s earnings.
– **Price/Sales**: Stock price divided by total sales, illustrating how much you’re paying for a company’s revenue.
– **Price/Book**: Stock price divided by book value (assets minus liabilities), showing if a stock is over- or under-valued compared to the company’s actual worth.
Understanding competitors is also crucial:
– **Top Competitors**: Lists key competitors within the same industry and their daily price changes, providing insights into industry trends and relative performance.
Financial information is essential as well:
– **Next Reporting Date**: When the company will release its next financial results.
– **EPS Forecast (This Quarter)**: Expected earnings per share for the upcoming report, influencing stock price performance.
– **Annual Revenue (Last Year)**: Total sales from the previous year.
– **Annual Profit (Last Year)**: Net income after expenses from the previous year.
– **Net Profit Margin**: Last year’s profit divided by revenue, with higher margins indicating financial health.
The profile section tells you about the company’s industry, leadership, and headquarters, while the forecast section offers analyst opinions on where the stock price might head over the next 12 months. However, these forecasts are just educated guesses and should not be solely relied upon.
Learning how to read stocks involves more than just these metrics. It’s about combining them to get a fuller picture of the company’s overall health and potential. Think of it like assessing multiple aspects of a person’s character before making a decision.
In conclusion, stocks need thorough research before investing. There’s no foolproof method to pick the perfect stock, but understanding and evaluating basic metrics helps identify potential issues or opportunities.
