← Back to Learn Investing

How to Research a Company Before Buying Its Stock

Your First Investment • Beginner Investing • 8 min

What this lesson is about

Every public company's most honest self-assessment is sitting in a free, public document most investors never open, here's how to actually use it.

2 parts · a quick check after each · then the quiz

Part 1 of 2

Every, U.S., public, company, must, file, an, annual, report, called, a, 10-K, with, the, SEC., You, can, read, it, for, free, on, SEC, EDGAR,, the, SEC's, public, filing, database., Most, first-time, investors, skip, this,, and, that's, a, real, missed, opportunity., The, 10-K, is, the, most, thorough,, standardized, source, of, information, about, a, company., It, includes, the, business, description, (what, the, company, does, and, how, it, makes, money),, risk, factors, (management's, own, list, of, potential, issues),, financial, statements, (the, income, statement,, balance, sheet,, and, cash, flow, statement),, and, the, Management, Discussion, and, Analysis, section, (MD&A)., This, last, part, has, management's, plain-language, take, on, what's, driving, the, recent, numbers.

Quick check

What is a company's 10-K, and who requires it?

Part 2 of 2

In, addition, to, the, annual, 10-K,, companies, file, a, 10-Q, three, times, a, year., This, is, a, shorter,, quarterly, update, that, covers, the, periods, between, the, annual, reports.

Insider, Angle:, The, MD&A, section, is, often, the, best, starting, point, for, a, first, read., It’s, written, in, plain, language, rather, than, just, raw, financial, tables., It’s, management, explaining,, in, their, own, words,, what, happened, and, why., Pay, close, attention, to, the, risk, factors, section, too., Some, of, it, is, standard, legal, jargon,, but, real, risks, (like, a, concentrated, customer, base, or, a, major, lawsuit), are, revealed, there,, in, the, company’s, own, words,, before, they, hit, the, headlines.
Try, This:, Choose, a, company, you’re, curious, about., Look, up, its, most, recent, 10-K, on, SEC, EDGAR, (search, "[company, name], 10-K, SEC, EDGAR")., Focus, on, the, Management, Discussion, and, Analysis, section, and, note, one, specific, thing, you, learned, that, you, wouldn’t, get, from, a, headline, or, stock, price, chart, alone.

Quick check

Where can anyone access a public company's 10-K for free?

Quiz

Master this lesson

Test what you just learned. Correct moves you up, wrong moves you down - reach 100 to master this lesson.

0
/ 100
Log in to save your progress and earn XP.

Related lessons

Swipe for more
What to Look For Before Buying Your First Stock "I heard it's about to go up" is not a reason to buy a stock, here's the short, honest checklist to actually run through first. 7 min Beginner How to Open a Brokerage Account The account itself is free at every major brokerage today. The actual decisions are which account type and what you do with it once it's open. 6 min Beginner Why Diversification Is the Only Free Lunch in Investing Economists rarely agree that anything in finance is truly free. Diversification is the one thing Nobel laureate Harry Markowitz himself called exactly that. 6 min Beginner