Stock market investment is one of the best ways to achieve financial freedom as without proper investment and savings, one can never taste the benefits of stock’s investment. Though there are numerous products available in the stock market, receiving huge benefits from it is still a challenging task. However, if you apply the right stock strategy, then you may benefit from various stocks.

It is extremely important to do a stock analysis before putting your money to any stock. This is because with the help of it, you will get to know the real strength of a stock along with its financial position, growth potential and a lot of things which will help you in picking the right stock.

When it comes to investing in a potential stock, then stock brokers play a crucial role as it helps you to identify the real worth of a stock.

How to analyze a stock before investing in the stock market?

It is advisable to invest in a company’s share only after doing a thorough research of the company. There are generally two ways to analyze a stock: fundamental analysis and technical analysis. Firstly, figure out the technical analysis of stock trends. Future price of stock is predicted using past price movement.

Industry Analysis

There are bundles of publicly available sources for any industry. Also, the annual report of a company provides a detailed insight into the industry. Reading annual reports help investors to get a clear picture of a company.

Financial Strength

Financial strength of a company is the best way to analyze the stock as without understanding the potentiality of a stock, you can't think like an analyst. Go through the financial reports as it helps investors to go through the income statements, cash flow statements.

Growth Analysis

Growth analysis is the next major factor to identify the robustness of a stock. To perfectly analyze a stock, investors are required to check the growth of a stock such as its past performance, and how well they do it for the next five years.


In order to calculate the stock value, analysts are required to analyze the current market price of the stock as compared to the company's value. There is no correct value and different analysts use various parameters in order to get the real value of a stock.

Liquid Stocks

Investors need to consider the liquidity factor when it comes to intraday trading. Liquid stocks are the stocks which can be easily converted into cash. You should even buy liquid stocks even though you buy high liquid assets.

How To Do a Fundamental Analysis of a Stock?

Investors can find out the value of a stock through its intrinsic value. With the assistance of intrinsic value, traders can find out whether the stock is undervalued or undervalued. This can be achieved through reading of financial reports, balance sheets, P&L account, EPS, dividend yield.

The Bottom Line

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Author's Bio: 

I am a content writer with an interest in digital marketing.