When evaluating the fundamentals of a stock, ask -
- What is the relative strength of the stock relative to its peers?
- What is its year-over-year growth (earnings)?
- What is the return on capital?
- How much debt is on its books
- P/E, P/B value.
- What is its intrinsic value?
Other Points
- Earnings, M&A, Insider Trades, other announcements can act as catalysts to the price of a stock.
- If stock A in a sector announces bad/good earnings, chances are that its peer or competetor (B), would have similar earnings too. So one can use this info. as being a potential catalyst in driving the price of the peer in the direction of its intrinsic value, or in the direction of stock A’s price.
