8 Steps On How to Analyze a Stock (Stock Analysis for Beginners Made EASY)
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- เผยแพร่เมื่อ 18 ก.ย. 2024
- You have likely seen a lot of people out there telling you their big "secrets" on how to analyze a stock and provide very little, if any, actual feedback in terms of what it all means. Well, today we take a look at our 8 simple steps or "pillars" that we use when analyzing a stock.
The 8 Pillar process is the process that Paul and the Everything Money team use when taking an initial look at stock. As value investors, we understand that buying a stock is buying a piece of a business. If we are going to co-own a business we want to understand the financials first. Once this process is learned you can save a lot of time by taking 10 -15 minutes analyzing a companies fundamentals. Once a stock passes this sniff test you can move on to a deeper screening by listening to investors' calls & presentations and taking a deep dive into a 10k report.
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To watch the full 8 Pillars in action, check out the following video as Paul gives a detailed explanation on each of the 8 Pillars Everything Money is known for: • 8 Pillar Analysis Expl...
There are 2 ways to join our community and receive access to the Everything Money Software and the 6,000+ discord community of like-minded investors:
Directly through everythingmone...
or
Patreon - / everythingmoney
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**BOOKS WE RECOMMEND FOR INVESTING **
You can find all these books on Amazon
The Psychology of Money - Morgan Housel
www.amazon.com...
Richer, Wiser, Happier - William Green
www.amazon.com...
The Intelligent Investor - Benjamin Graham
www.amazon.com...
One Up On Wall Street - Peter Lynch
www.amazon.com...
Beating The Street - Peter Lynch
www.amazon.com...
The Little Book That Beats the Market - Joel Greenblatt
www.amazon.com...
The Complete TurtleTrader: Michael Covel
www.amazon.com...
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Video editing by The Tweaky Tales
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For more details, you can find the full disclaimer here: bit.ly/3n0NxuD
1. PE ratio < 20 (Market Cap / Earnings)
2. Profit margin > 10% (NI post tax/ Revenue)
3. Revenue growth (past 5 years)
4. Profit growth (past 5 years)
5. Number of shares outstanding (decreasing or same)
6. Current assets > Current liabilities
7. Free cash flow (cash from ops - capex)
8. FCF = NOI < 20 (past 5 years)
Making this my phone background so I can get it through my thick skull
@@rhebbhulett Haha. Hey, whatever works, right?
If that's what works for you then do it.
@@rhebbhulett haha, that’s some dedication that I can respect, cheers 🍻
Screen shot this
You mean 7. Free cash flow growth* (cash from ops - capex)
This Video is pure GOLD!!!
Thank you Malek! Love the support - PG
My old best friend told me I had to pick between him and everything money videos. Sometimes I miss him...
Hahahahahaha i actually thought this was gonna be a rip on me. Well done matthew. gg. pG
🤣🤣🤣🤣🤣
On today’s episode of things that never happened
Bwahahahahahaha invite him here!!
I literally sit here with a pen and paper taking notes on most of your videos. This channel is truly undervalued and I'm buying in 😁
From the bottom of my heart, I really ENJOY so much the format, the content and the good vibes of you guys. I learn so much with every video! This channel it's a must to see!
Ps: I proclaim myself your # 1 fan.
I found your channel this morning and I must confess - this is far more valuable than anything else. DAMN
Thanks so much! I appreciate it. Where are you locatwd
@@EverythingMoney Bulgaria, Eastern Europe
Wow thats awesome!
1. Pick stock (Top/ Down approach: Economy, Sector, Industry, Company)
2. Fundamental Analysis (Form 10-K/-Q):
Business (model)
MD&A
Financial statements analysis
Company presentations & Earnings call
Competitor Analysis (Economic moat)
Catalysts
3. Intrinsic value
4. Margin of Safety
Good , you know your stuff .AP
This is Crazy!!!! This is the best Stock analysis video I have seen ever. Period. Period. I'm signing up for the Patreon right now
This is easily the best analysis video I’ve watched.
Thanks Colby. Glad you liked it. How long have you been investing? - Seth
I know this is an old vid but I've just started investing and found you guys like a week ago and have watched a lot (LOTS!) of your videos. I have learned so much from you guys. Paul you're my Dude! Thank You from the very bottom of my heart for teaching me how NOT to lose all my money. Truly guys, thank you.
Watching this again, trying to make sure I understand better. I have used the 8 pillars to evaluate all my current positions. A larger percentage are overvalued, which means I should find a better valued items to put new money to work. How should I treat dividends in over valued stocks? Reinvest or take the cash and find better value?
Hey Tom. Remember that the eight pillars aren’t supposed to be the be-all and end-all. It’s just a starting point. As for dividends, I would just accumulate them in your account and use them to buy other stocks. That’s my opinion PG
I will just say this, Paul and Seth literally saved me from losing money every day. Seriously hype chasing gets a person so far.
Glad we can be of help -SH
I get a Tastytrade vibe from your format. Love it. My new 2nd fav investing channel. (Sorry Sosnoff has my heart)
Glad you enjoy it!-AP
I’m new to investing and speculating within the stock market as I’ve only been active for two years. In my business, Ethernet Network Engineering and Data Center Engineering, I’ve managed others for nearly 20 years. Beware of those who attempt to build themselves up, by tearing others down. That behavior has to be rebuked and if the offender does not correct themselves, remove them from the organization as their poor attitude and actions will spread like a cancer. Other than that, your group shares a number of great ideas that I enjoy learning. Thank you,
This video is so great guys! Thank you
Thank you! Glad you love it. Ifs a bit different. - PG
wow 😯 this is the video I’m looking for, Thank you so much for all this information .
So glad I stumbled across this channel, and I'm from Akron, Ohio as well. Represent!
New subscriber. Love it
Paul in some cultures a beard is a symbol of wisdom. So watch out if Moses comes with 10 Pillars.☺
Haha good call - PG
You guys are so underrated, love the videos! From New Zealand❤️❤️
We love you too 🇳🇿 🐑 -SH
So much information hard to wrap my mind on the whole thing. Does a split or reverse split have anything to do with outstanding shares increasing or decreasing?
Re Price to Free Cash Flow < 15 or 20, can we know the basis for the 15 or 20? Isn't being a bit overpriced good too in a way because it means there is demand or that potential growth is ensured for that company?
Just found this channel and I bloody loved it this guys and how they analyze in a quick and sistematic way companies
Best channel on TH-cam
Best Channel on TH-cam as far as I’m concerned. Loyal Subscriber gained.
Thank you for explaining the analysis behind your stock evaluations. Most channels purely speculate upon news and hype and I have been looking for something with fundamental analysis. Why do you use free cash flow for your estimate of business market cap? Are there alternate methods for estimating a businesses overall worth?
There are many methods. You need to find one that speaks to you. For me its cash flow. And no problem! I am glad you see that we are different - PG
You guys are eye opener 👌
This is the video I've been waiting for to share to my friends to try incourage them to invest in stocks 😁🙌
Awesome! Let me know how they like it. - PG
@@EverythingMoney they're all skeptical of the markets paul. They seem to think it's either , for the rich, too complicated or unwilling to wait the test of time. But I'm working on them one video at a time thanks to you guys 😆👌this one will help for sure
I don’t blame them for thinking that. The media does a good job of portraying that. I actually think it’s the opposite and allows people who are more “normal“ to build wealth. Just look at history of the United States and as time went on and more people had access to the stock market, the nation as a whole grew in wealth. PG
Love the 8 pillars , it helps me find the truth about value of stocks...(still a learning by the way I'm not perfect)
I have to join the program to improve more. I love the wallet analogy but got confused at the end.
Thanks for the great content
You can do it Humphrey keep going at it and with time you will understand it fully .
If you havent joined the i will leave you the link to our discord and software on patreon . Love AP
Patreon.com/everythingmoney
@@EverythingMoney Thanks My King 👑 South Africa needs this ...we a so abused in our country financial because of lack of knowledge...if you don't mind check out easy equities it's a South African platform where Stocks & ETF'S are traded. They maybe willing to work with you
Thanks again
Great video as always! Sorry if this is a dumb question, but how do you determine what the company/stock price IS worth? Let’s say the analysis shows a check mark on most pillars, how can you tell if the actual stock price is cheap/expensive?
That’s not a dumb question. It’s not just one piece of information. That’s part of why I’m glad you watch the videos and will continue to watch the videos because as Warren Buffett says, every investor will have a different value for every company. They’ll be certain things that you look at and determine are the right ways to approach the company and things that I do that you don’t care as much for. You have to decide, at the end of the day, how much you going to pay today for what you have calculated as the future cash flow. PG
@@EverythingMoney thank you! 🙏🏻
Very fascinated by this video. I have watched the 8 pillars in your previous videos, but I think the more you see the reasoning behind the pillars the less mysterious stock investing will be. It seemed to go by very quickly. I would like to see more of how Paul decides which companies will grow in the future and which will not.
Tried to watch the social media live stream but it cut out on me. TH-cam said the video was not available and then I believe it said it was private. Perhaps because I needed to update my browser.
We cut the social media live stream short.
I will go into further detail about my assumptions about the future but the basic idea is to look at the past and understand the company in the industry there and determine if they have good growth potential for the future. PG
Who need yahoo or cnn when we have this channel and paul😁
And have you watched , MOrning bell, he goes thro all the news and gives you real talk about it , not like in tv that is all bull. love -AP
I just went to school. That was very very educational. Thanks Paul.
Just found this channel. Love it already. New subscriber here. Keep going
Thanks so much! I suck at COD btw. Too hard for me. - PG
your channel is golden! I'm so happy I found your channel it makes understanding the fundamentals easy!
Seth came up with “Pilliars & Tesla”….WoW!!!!!!!
You guys are so awesome 😎
Thanks for the love -AP
thanks guys. I am new on this channel. I already subscribed looking to learn more....god bless you 🙏🙏🙏
Great value taken from this video. The only thing I know I'm gonna have a hard time with is finding a massive list of businesses to start valuing one at a time. Any tips to help me narrow my search?
Hi Guys! I watched it for the 2nd time and made notes. Already feel smarter with this knowledge. Soon I will decide on supporting you on Patreon, really waiting for the App. Cheers!
Wow! Very informative video.
You guys are amazing, tks!!! very simply to understand like that!!
I love when Paul makes the analogy of when you have more bills than money you have in your bank account with a reply of saying “You Have Problems” I starting dying of laugher
Lol - PG
You guys are the TH-cam channel I’ve been looking and hoping for. Awesome content
I love u guys. Ur channel is going to grow exponentially! Keep it up!!
Thank you so much!AP
It's great to go back to these older videos to see how the channel has grown but the fundamentals are still the same
That Warren Buffett analogy sums it all up! So good
This is a great video. I started trading 2 months ago (already lost $300 of my $1500 bank). I stopped. It was time to understand the FUNDAMENTALS and this video taught me more than an entire semester in college struggling in Accounting 101 😏. Question: given that option trading has a shorter life span (weekly, monthly, quarter). Which of the 8 pillars is most critical in assessing a stock for option buying? Thank you!
Fundamentals from stock side of things :
#2 revenue past 5 years : I will just make sure it's practical and consistently going, but not too fast.
#6 current asset > current liability: personally, I like companies with greater than current ratio 1.5 or higher; it's what warren buffett prefers.
Fundamentals from the options side of things( assuming ur a buyer of the option ):
#1 ( buyer) time is your enemy, so buy at least 1 year away ( i.e. LEAPS); some people say think 9 month is enough, but I prefer 1.5 years to 2 years.
#2) ( buyer) delta is very important. At the bare minimum, 70 delta; but I prefer 86 - 90 delta.
#3) ( buyer) Don't over allocate into options. Ideally, 10% - 20% is enough. If however, you do over allocate, you can either longer term debit spreads or close long before option expires; not ideal, but that's why you want time on your side.
I am hooked on this space. Thank you.
I have watched a handfull of youtube channel and only in this one i was able to learn how to analyze a company thanks to the 8 pillars. Thanks for sharing such valuable information just for likes.
Are operating expenses included in free cash flow? Shouldn't payroll etc be included along with capital expenditures? Or is that accounted for elsewhere?
Does the 8 Pillars work for ETFs as well?
How would you screen the 8 pillars on Finviz?
do you place equal weight on each pillar?
Very good vid about analyzing stock, just one question, in pillar eight you make the sum of five year FCF divided by 5 and multiply by 20 to get an average stock price. The number 20 is fixed or is it the P/E of the stock you analyze?
9:58 “that’s a shiesty thing to do” 🤣
Not only is this video very informative, but the chemistry between you two has also made the video very interesting to watch
Another channel worth subscribing ;)
How would someone justify investing in Square despite its very high PE ratio?
Hi, I'm trying to better understand the 8 pillars and how to use it. Is there a video to better learn it
We do have an updated one. here it is th-cam.com/video/1u6qvel9XnM/w-d-xo.html
Thank you
Very insightful to understand the thinking behind the 8 pillars - thank you for the lesson!
You guys got me confused with the wallet so I put ally money in my crypto wallet.
Don't know why but Paul's shorts threw me off! LOL
Great show guys!! Keepemcoming...
I am using the 8 pillars and trying to understand it better. Using the wallet analogy, shouldn't I extrapolate what the company will make in the future? If I geustimate that the wallet will be 1000 over 10 years, would it be ok to pay 500 now for the 100 wallet?
Or do you do that with the multiplication of 20?
So the wallet analogy is purely a way to show, simply, how I think about companies and investing. Yes if you think the wallet will have $1000 in it in 5 years and only has $100 today, $500 would NOT be unreasonable. Thats why I like the analogy. It causes you to think. Im not here to tell you ehat the right method is for you. Im glad you asked this bc it does show youre thinking - PG
This info is amazing!!! Thanks so much. Quick question is there a webpage where I could find these different numbers for a given company so I could calculate each of the 8 pillars? I'm just looking for a specific place to go to online to find these different revenue, expenditure numbers etc numbers for a given company, thank u!
Do paul have his own youtube channel?
My Favorite video. And to be totally clear, I came up with the term “FAVORITE “…😂😂😂
Can someone tell me how they handle stock splits?? I understand one of the pillars is
number of shares outstanding*
But how do they handle stock splits like Amazon's 20/1 split?
Wouldn't the numbers be skewed?
Great info
Took notes on this!
When are you going to have a VALUE sale on your membership?
3:10 damn throwing shade at Roaring Kitty
Thank you ,Gracias ,Vielen Dank, Спосибо, Благодаря много полезно
Did you guys mention a 9th column that was going to be added?
Hay! Love your videos you guys are awesome, if i calculate the fcf the same way you showed and i divided by 5 and then doubled by 20 and the number the pop ups is higher the the current price of the stock it means its an attractive price?
so glad I came across this channel
Guys pleaseeee explain again what's the number 20 in "price to free cash flow" means.
Guys I think you should add the Metric "Industry Average" in your software next to every pillar, it would be very useful
Thank you for sharing.
My pleasure!
on pillar 8 the title says 20% but you actually mean X20 right? (14:28)
Second time watching this video and I had to pause to make a comment. Paul is very smart that's for sure, but him being like me he has ADD , his mind wanders but not to far since he have mastered to use his ability of many thoughts to his advantage. The guy on the computer how ever smart are focused on the task and he is very focused and not being able to analyze others variables .I love ADD when is mastered 😎
Ok. So I need to go through this, and make notes in one of my notebooks. Otherwise it just won't bed in for me :-)
Loved the wallet explanation
Im a big fan of it as well! - PG
Let it go guy
thank you, it looks like no one looks up how to analyze a stock
Thanks guys.. I am a beginner investor and wanted to understand Ho to pick a growth stock, how to understand if it’s overpriced or not. For example Nio.. Thanks and I appreciate your help
Watch out 8 Pillars video -SH
When talking about "FCF = NOI < 20 (past 5 years)" at 15 min. Why do you take times 20?
How do you pick what multiple?
Hi, I like what you guys are doing. Do you have your everything money app up and running if not when will it be? Keep up the great work. Brian
Grat vid !! Whats your opinion about DENN?
Thanks for another great video
Thanks for watching it! We love making the content and it just makes it better when people appreciate it, like you are. PG
I hope Paul puts together a course like this for students
A new subscriber from the UK! So much analysis into a company from a few figures and really simple to understand! What would be you're opinion on taking (forward) P/E in terms of companies that have been unable to have any earnings through the pandemic?
Starting to like this channel I will watch a little more
THanks Fred! keep watching! - PG
Can you analyse the stock of the company EXPONENT please? ticker expo
We will look into it , thanks -AP
thank you so much guys. this is probable the best channel for traders! if you have seen a nice amount of subscribers these few days they are my gang of traders, i am sure they will appreciate it just as much as me. if you have anything in addition to offer me i will be happy to consider this and refer others also. thank you again, love this channel!!!
Wow! Thanks for the incredible support. We appreciate it! Where are you from?
Damn..I missed the last live stream :(..
How much you guys pay per trade at a broker in the US? Is it cheap there?
I think it was the Robinhood online trading platform that began no fee stock trading. Now many of the large onlinw brokerages such as Charles Schwab, TD Ameritrade, Fidelity and Vanguard have adopted zero fee stock trading.
Yeah depends on the company but there are a lot of $0 trades - PG
TDameritrade allowed me to create an foreign account outside the USA. 0 comission and very friendly.
Just for information, I checked and Charles Schwab charges $25 per stock trade for broker assisted trades. Online trades are free.
Correct. - PG
Average Free Cash Flow x20 to get price one would be willing to pay. Where did the 20 come from?
Gentlemen,
Thank you for providing a foundation to analyze stocks. I just appreciate having direction as a new investor. Great job with the channel and I’ll like every video I come across as a show of gratitude.
can I use this if I am looking for a long term investment?
That should not be the only criteria but this is what I use to start evaluating a company. I don’t stop here though. PG
Where is the link to join the Patreon, I want to be the first!
Thats nice of you! Soon! - PG
15:38 the hurt on his face.