How I research a stock: six checks before buying
A stock is a slice of a business, so research it like a possible owner: understand what it does, test its finances and plans, then ask what the future cash flows might be worth. The video’s six-step process is a disciplined checklist—not a promise that a stock will rise.
Built from Richard Coffin’s video for The Plain Bagel (automatic English captions); the 10-K description checked against Investor.gov · Watch the source ↗
The claim
Research first. Price later.
The speaker is describing his own fundamental-analysis workflow, not giving a stock tip. He says many people may be better served by diversified passive investing; stock picking takes work and has no guaranteed payoff.
The first filter
Screen wide; investigate narrow
A screener can sort thousands of tickers by broad signals—such as revenue growth, profitability or debt—then a one-page snapshot helps decide what deserves weeks of deeper work. A filter finds candidates; it does not tell you what to buy.
Understand the business
Could you explain how it earns?
Map segments, customers, suppliers, staff, regulators and geography. Ask whether revenue repeats, depends on seasons or comes from contracts. Look for a real competitive edge—a moat—and what protects it. Sort notes into internal strengths/weaknesses and external opportunities/threats; park questions. If you don’t know the industry, learn it or pass.
Find the evidence
Start with filings, then triangulate
Annual and quarterly filings lay out the business, risks and financial statements. Add investor presentations, earnings-call transcripts, news and customer feedback. The video uses paid terminals too; whatever the source, learn how its data is collected and adjusted. Investor.gov: what a Form 10-K contains ↗
Check the finances
Three statements; one connected story
The income statement records performance over a period; the balance sheet is a snapshot of assets and obligations; cash flow tracks cash in and out. Compare growth, margins, liquidity and debt over time and against relevant peers. He uses multi-year CAGRs (smoothed annual growth rates) and common-size statements (each line as a share of revenue or assets)—not just one headline ratio.
Test the story
Does the plan fit the track record?
Study what management plans to invest in—capital spending, acquisitions—and how it will fund the plan. Check execution history and long-run returns on capital, incentives and related-party deals. “Adjusted” numbers are not automatically dishonest; inspect management’s compensation and exactly what each adjustment removes.
Value the stock
Good business ≠ good price
Relative valuation compares multiples or cash-flow yield with the company’s history and suitable peers. A discounted-cash-flow model estimates what projected future cash is worth today. Change the assumptions; the estimate changes too. Recent news and chart signals may affect timing, but they don’t replace the business case.
Try the model
Growth changes what cash is worth
A tiny perpetuity model: next year’s owner cash is $5/share and then grows at a steady rate forever. If the required return is r and growth is g, value = $5 ÷ (r − g), provided r > g. This is a teaching toy, not a complete company valuation.
Decide, then keep learning
Wait, buy—or walk away
If the business looks strong but the price is too high, park it on a watchlist and set a price alert. The speaker sometimes averages into companies he likes, but still wants a reasonable entry price—overpaying can raise the risk of losing capital. Record the thesis, fill gaps, seek opposing views and revisit it when new evidence arrives; the process continues after buying.
Research is a sequence of questions about a real business; valuation is the final estimate, not the first filter.