How to research a US stock

Start with a question you can answer with evidence: how does this business earn money, what could change its earnings, and what assumptions does today's price require? Keep a dated research note so you can distinguish a new fact from a changed interpretation.

1. Confirm the company and gather primary sources

Check the issuer, ticker, exchange and share class. Use SEC EDGAR to find filings, then compare them with the company's investor-relations page. For US domestic issuers, a 10-K is the annual report and a 10-Q is the quarterly report. Foreign private issuers may use different forms.

Record the period covered and the filing date. A newly published article can still describe an old quarter. Investor.gov's guide to reading a 10-K is a useful map of the document.

2. Explain the business in your own words

Write down who pays the company, what they buy, and which costs matter most. Separate recurring demand from one-off contracts. Look for exposure to a single customer, product, geography or financing source. If you cannot explain how revenue turns into profit, you are not ready to rely on a valuation model.

3. Check earnings against cash and the balance sheet

Compare revenue, operating margin and diluted earnings per share across comparable periods. Then check operating cash flow, capital expenditure, working capital and debt maturities. Keep reported results separate from management's adjusted figures and identify the excluded costs.

Write down why the numbers moved. Stronger revenue can coexist with weaker margins; higher profit can coexist with cash tied up in inventory. Those differences often make better research questions than the headline growth rate.

4. Compare valuation with an appropriate business

A low multiple is not automatically a bargain. Compare companies with similar economics, then explain differences in growth, profitability, leverage and share dilution. Use the same accounting period and definition for each comparison. Our valuation guide shows how assumptions change a simple earnings-based estimate.

5. Write both arguments and the evidence that could settle them

Build a bull case and a bear case using the same source set. List the next observable event that could strengthen or weaken each view: a filing, a margin change, a refinancing or a customer disclosure. The fictional report example shows how to structure those questions.

6. Use tools to organize the work

AI can summarize documents and help you find follow-up questions, but check important figures against the filing. Keep a historical price chart separate from business evidence. A trend does not establish the quality of earnings or the value of the company.

A useful final note has five parts: business model, dated sources, bull and bear arguments, valuation assumptions, and unanswered questions. Update it when the evidence changes rather than treating an old conclusion as permanent.