This article will help you stock analysis, thereby helping you to comprehensively evaluate the growth potential of a stock and make a decision to buy, sell or hold.
Stock analysis method
Stock analysis is the process of collecting, processing and evaluating information related to a particular company or market in order to make a forecast about the future price of the stock. The ultimate goal of stock analysis is to help investors make effective decisions about buying, selling or holding stocks.
Popular stock technical analysis tools
Chart
- Line chart: Shows the movement of closing prices over a given period of time.
- Japanese Candlestick Chart: Provides more detailed information about the opening price, closing price, highest price and lowest price during a trading session.
- Bar Chart: Similar to Japanese candlestick chart but displays information as vertical bars.
Technical indicators
- Moving Average (MA): Average of closing prices over a given period of time, helps determine trends and support/resistance levels.
- Relative Strength Index (RSI): Measures the speed and magnitude of price movements, helps identify overbought and oversold areas.
- Moving Average Convergence Divergence (MACD) Indicator: Compares two moving averages to identify trends and reversal points.
Model
- Triangle: Shows a narrowing trading range before a breakout occurs.
- Cone: Similar to a triangle but with a sharper peak, often signals a strong change in trend.
- Rectangle: Shows price oscillating within a certain range before breaking out to the upside or downside.
Stock fundamental analysis
Stock fundamental analysis is the process of assessing the value of a company based on financial information and business fundamentals. Some important factors in fundamental stock analysis include:
- Sales and Profits: Review a company's historical and forecasted sales and profits to understand business performance.
- Financial Situation: Evaluate financial balance, debt, interest rates, and cash flow to ensure the company's financial health.
- Competition and Competitive Advantage: Consider the company's competitive position in the industry, unique products/services, and capabilities to compete.
- Leadership and Management: Assesses the company's leadership, management strategy and ability to adapt to a changing business environment.
- Industry trends: Understand the trends and growth potential of the industry in which the company operates.
- Future and Prospects: Forecasting the company's future prospects based on business factors and economic environment.
- Stock Price to Intrinsic Value: Assess whether a stock is priced correctly relative to the company's intrinsic value to determine whether to buy, sell, or hold the stock.
Stock analysis and valuation
Stock analysis and valuation is the process of assessing the value of a company based on various factors. Basic steps for analysis and valuation Types of stocks as follows:
Step 1: Fundamental analysis
- Gather information: First, gather information about the company including financial reports, industry information, products/services, competition, and other factors that affect the company.
- Financial Analysis: Evaluate a company's historical revenue, profits, cash flow, financial position, and other metrics.
- Competitive Analysis: Examines the company's competitive position in the industry and its ability to compete in the market.
- Management Assessment: Review leadership, management strategy, and ability to adapt to market changes.
Step 2: Stock valuation
- Valuation Methods: Use stock valuation methods such as fundamental valuation method, comparables method, or asset valuation method.
- Value Estimate: Based on the analysis results, estimate the company value and stock price.
- Compare to Market Price: Compare the estimated stock price with the market stock price to see if it is over or undervalued.
- Make investment decisions: Based on valuation and analysis results, decide to buy, sell or hold stocks.
Why is Stock Analysis and Valuation Important?
Some of the reasons why stock analysis and valuation are important include:
Make informed investment decisions
- Avoid buying “bubble” stocks: Careful analysis helps investors identify stocks that are being priced too high compared to their real value, avoiding the risk of losing capital when the bubble bursts.
- Select potential stocks: By comparing intrinsic value and market price, investors can find undervalued stocks with the potential for strong growth in the future.
- Investing in strong companies: Fundamental analysis helps investors assess the financial health and competitiveness of businesses, thereby choosing companies with potential for sustainable development.
Building an effective investment portfolio
- Diversification: Analysis helps investors choose stocks from many different industries, minimizing risks when a certain industry encounters difficulties.
- Balancing risk and return: Investors can build a portfolio that ensures both profitability and risk control.
- Optimizing returns: By properly allocating capital across different stocks, investors can increase their chances of achieving their financial goals.
Maximize profit
- Buy at the right price: Investing in stocks when prices are low and selling when prices are high is an effective way to make a profit.
- Minimize the risk of losing capital: By choosing stocks with solid fundamentals, investors minimize the possibility of losing capital due to unexpected market fluctuations.
- Long-term investing: Fundamental analysis helps investors find companies with long-term growth potential, thereby generating sustainable profits.
How to analyze stocks effectively
Stock analysis is the process of evaluating the factors that affect the stock price and the growth potential of the company issuing the stock. Here are some effective ways to analyze stocks:
Build a clear investment plan
- Define your goals: What do you want to achieve from investing? Capital growth, passive income, or building a stable financial source for the future?
- Determine your investment time horizon: Can you invest short-term, medium-term or long-term? Each time horizon will have a different investment strategy.
- Determine your risk tolerance: The level of risk you can accept will influence your choice of stocks and portfolio.
Choose the right tool
- Technical analysis software: TradingView, MetaTrader, Amibroker…
- Financial websites: Vietstock, Cafef, VnExpress Finance…
- Research reports: Reports from securities companies such as SSI, HSC, VNDirect…
- Investment platforms: For example VnDirect, MoMo, FPTS…
Follow the news
- Macro news: Economic and political events that affect the general market.
- Industry News: Information related to the industry in which the company operates.
- Company news: Financial reports, information about new products, personnel changes…
Be patient and diversify
- Patience: Investing is a marathon, not a sprint. Stick with your plan.
- Diversification: Invest in different stocks, different industries to minimize risk.
Specific stock code analysis
Stock analysis is the process of looking deeply into a particular company to assess its investment potential. This process requires a combination of technical analysis and fundamental analysis.
Steps to follow stock code analysis Specifically include:
Step 1: Gather information
- Company information: History, fields of operation, products/services, target market, competitors.
- Financial statements: Balance sheet, income statement, cash flow statement.
- Related News: Articles, research reports, information about important events affecting the company.
Step 2: Fundamental analysis
- Business Model Evaluation: Evaluate the sustainability and profitability of the business model.
- Industry analysis: Assess the competitive situation and industry development trends.
- Management Assessment: Assess the management team's capabilities, vision and strategy.
- Financial evaluation: Analyze financial ratios such as P/E, P/B, ROE, ROA to evaluate performance and compare with companies in the same industry.
Step 3: Technical analysis
- Build price charts: Use technical analysis software to draw stock price charts.
- Trend Analysis: Determine whether a stock's price is rising, falling, or moving sideways.
- Use technical indicators: RSI, MACD, Moving Averages to determine buy, sell points and support/resistance levels.
- Identify patterns: Triangles, Cones, Rectangles to predict future trends.
Step 4: Pricing
- Estimating intrinsic value: Use valuation models like DCF to calculate the true value of a stock.
- Compare to Market Price: Compare intrinsic value to current market price to assess valuation.
Step 5: Make a decision
- Buy: If the market price is below the intrinsic value and the technical signals are positive.
- Sell: If the market price is higher than the intrinsic value and technical signals show a downtrend.
- Hold: If the market price is close to the intrinsic value and you still believe in the company's prospects.
Example: VNM (Vinamilk) stock analysis
- Information gathering: Learn about the dairy industry, Vinamilk's position in the market, new products, expansion plans.
- Fundamental analysis: Evaluate revenue growth, profit, competitiveness, sustainable development strategy.
- Technical Analysis: Build price charts, use indicators to determine trends and buy/sell points.
- Valuation: Estimate the intrinsic value of VNM using DCF model, compare with current market price.
- Decision Making: If the intrinsic value is higher than the market price and the technical signals are positive, a buy can be considered.
In short, the stock analysis is a process that requires a harmonious combination of technical analysis and fundamental analysis. Understanding the tools and methods of analysis will help you make better investment decisions. Platforms such as HVA provides a favorable environment for you to analyze and evaluate stocks. However, remember that there is no general formula that guarantees success 100%. Keep learning and updating the latest information to become a wise and experienced investor.
