Reading/Analyzing Stock Info
Many newspapers publish financial pages that provide readers with a great deal of information about the world of stocks, mutual funds, and bonds. One excellent source is the Wall Street Journal (often called The Journal). Other newspapers have similar information. This information will help guide you in selecting your stocks. Using the numbers in the picture above, below is a brief description of each. The "Researching Stocks Worksheet" is located on the next link or you can obtain it from your instructor to follow along.
Before we begin breaking down this image, watch this video:
0-Name of the Company who is publicly trading on one of the stock exchanges.
1-A ticker is a stock symbol for that particular stock. Each company who exchanges on
the New York Stock Exchange have typically a 3-letter code as their ticker. Mutual
funds have a 5-letter ticker ending with X.
2-This column reports the highest price of the stock in the most recent 52-week period. That way, if the current stock price is close to the high, you know that it may not be a good time to buy.
3-This column reports the lowest price of the stock in the most recent 52-week period. If a stock price is close to this price, you may want to consider buying it.
4-DIV stands for dividend, which is an annual payment per share to owners of the stock. Stock dividends are usually paid quarterly (every three months).
5-The yield (YLD) is the dividend calculated as a percentage of the closing price.
6-P/E ratio is the ratio of price to earnings. The P/E ratio is obtained by dividing the stock's price by the company's latest 12-month earnings per share. It is the most widely used and critical measurement of the stock's price. It represents how much investors are willing to pay for each dollar of the company's earnings. Most companies have a P/E ratio of 5 to 25. Financially successful companies have a ratio of 7 to 10, rapidly growing companies are between 15 to 25, and speculative companies are 40 to 50. Lower P/E stocks pay higher dividends and have less risk, lower prices, and slow growth. High P/E ratios indicate a firm is expected to have a lot of growth in the future.
7-Beta measures a stock's volatility compared to changes in the overall stock market. If a stock has a beta of +1.5 and the market went up 10%, it is expected the value of the stock would rise by 15%. Conversely, if the market dropped 10%, a +1.5 beta stock would drop 15%. Stocks have an average beta between +0.5 to +2.0. A negative beta is a countercyclical stock because the price changes are opposite the movements in the business cycle. Conservative investors want a stock with a beta of +1.0 or less meaning the stock is less sensitive to changes in the market. A beta of +1.1 to +2.0 indicates the stock is more sensitive to changes in the market because it moves at a greater percentage. A higher beta indicates a greater risk.
8-This represents the high selling price of the day for one share of stock from the previous day.
9-This represents the low selling price of one share for the previous day.
10-This is the number shares traded on the reported day, represented in hundreds (take the number and add two zeros).
11-The close is the price of the last share sold for the previous day.
12-Net CHG is the net change or difference between the closing price of a share from the prior day and the current day. A loss will be represented by a minus sign.
This video will show you where all this information comes from and why you want to look at it to make your decision.