How to Perform Fundamental Analysis of StocksHow to Perform Fundamental Analysis of Stocks
In the dynamic world of financial markets, traders seek every available edge to make informed decisions. Among the numerous tools at their disposal, two approaches stand out: technical analysis and fundamental analysis of stocks. In this article, we will explore what fundamental analysis is, how it applies to stocks, and why it is a crucial tool for traders. Traders have the option to open an FXOpen account to perform fundamental analysis on numerous stocks available at FXOpen.
Understanding Fundamental Analysis
Before diving into the intricacies of fundamental analysis, it's essential to grasp the basics of technical and fundamental analysis.
Technical analysis primarily focuses on historical price and volume data to predict future price movements. Traders using this approach rely on charts, trendlines, and indicators like moving averages and Relative Strength Index (RSI) to make trading decisions.
Fundamental analysis, on the other hand, takes a more holistic view. It delves into the financial statements of a firm, examines economic indicators, and assesses industry trends. The goal is to determine the intrinsic value of an asset and whether it is overvalued or undervalued in the market.
Key Fundamental Analysis Components
Fundamental analysis involves several key components that traders must understand to make informed decisions:
Financial Statements
Fundamental analysis begins with a deep dive into a company's financial statements. These documents provide a wealth of information that is critical for assessing a company's financial performance. The three primary financial statements to consider are:
Balance Sheet: This statement offers an overview of a company's assets, liabilities, and shareholders' equity at a specific point in time. It acts as a quick overview of the company's financial standing.
Income Statement: Also known as the profit and loss statement, the income statement details a company's revenue, expenses, and profitability over a specific period. These ratios evaluate a company's capability to fulfil its immediate commitments.
Cash Flow Statement: The cash flow statement tracks the inflow and outflow of cash from the company's operating, investing, and financing activities. It offers valuable information about the company's liquidity and cash management.
Ratios and Metrics
To gain deeper insights into a company's financial health, fundamental analysts use various financial ratios and metrics. Some of the key ratios and metrics include:
Liquidity Ratios: These ratios evaluate a company's capability to fulfil its immediate commitments. Notable examples include the Current Ratio and Quick Ratio.
Profitability Ratios: These ratios measure a company's ability to generate profit relative to its revenue and assets. Examples include the Gross Margin, Net Profit Margin, Return on Equity (ROE), and Return on Assets (ROA).
Solvency Ratios: Solvency ratios evaluate a company's ability to meet its long-term financial obligations. The Debt-to-Equity Ratio and Interest Coverage Ratio are significant in this category.
Efficiency Ratios: These ratios assess how efficiently a company manages its resources to generate income. Examples include Inventory Turnover, Receivables Turnover, and Payables Turnover.
Growth Metrics
Understanding a firm's growth trajectory is essential for projecting its future potential and assessing its investment attractiveness.
Earnings Per Share (EPS) Growth: This metric indicates the rate at which a firm's earnings per share are increasing or decreasing over time.
Revenue Growth: It measures the growth in a firm's revenue compared to a specific period.
Book Value per Share Growth Rate: This metric assesses the increase in the firm's Book Value Per Share over the last five years.
Steps to Perform Fundamental Analysis
Here are the most essential steps to perform fundamental analysis.
Company Selection
The first step of fundamental analysis in the stock market is selecting the companies you want to analyse. Criteria for selection may include factors like the company's industry, market capitalisation, and growth potential. It's crucial to consider the broader industry landscape and market trends to identify promising candidates.
Collecting Financial Data
Gathering accurate and relevant financial data is paramount. Sources of financial data include the company's website, authority filings, and financial news outlets. Ensuring the data's accuracy and timeliness is essential for making informed decisions.
Analysing Financial Statements
In-depth analysis of a company's financial statements is the heart of fundamental analysis. Such metrics as a balance sheet and income and cash flow statements that were mentioned above are widely used by traders and investors to determine companies’ strengths and weaknesses.
Calculating and Interpreting Ratios
Utilising financial ratios is a critical aspect of fundamental analysis. These ratios provide a quantitative basis for evaluating a company's performance. Comparing the ratios with industry benchmarks helps identify areas of strength or weakness.
Evaluating Business Strategy
Assessing the quality of a company's management and its strategic decisions is another crucial element of fundamental analysis. This involves evaluating factors such as corporate governance, competitive positioning, and market share.
Economic and Industry Analysis
Understanding the broader economic landscape and industry dynamics is essential for contextualising a company's performance. Identifying macroeconomic trends and the stage of the industry lifecycle is critical.
Valuation Techniques
Fundamental analysts employ various valuation techniques to determine whether a stock is overvalued or undervalued. These techniques help traders make informed decisions about whether to buy, sell, or hold a particular asset. Common methods include:
Discounted Cash Flow (DCF) Analysis: This method calculates the present value of a company's future cash flows to estimate its intrinsic value.
Price-to-Earnings (P/E) Ratio Analysis: Comparing a company's stock price to its earnings per share, relative to industry peers, to assess its valuation.
Price-to-Book (P/B) Ratio Analysis: Comparing a company's market capitalisation to its book value per share to determine undervalued and overvalued companies.
Risk Factors and Limitations
Fundamental analysis, while a powerful tool, comes with its own set of challenges and limitations:
1. Incomplete Data: Many firms, especially in less regulated markets, may not disclose full financial information, thus hindering comprehensive analysis.
2. Future Uncertainty: Even though it's grounded in thorough research, fundamental analysis relies heavily on historical economic data. This approach also makes assumptions about future geopolitical and macroeconomic events, which can be unpredictable, thereby carrying a degree of inherent uncertainty.
3. Subjectivity: Different analysts may interpret the same data in various ways, leading to different conclusions about a currency's value.
4. Overemphasis on Long-term: Fundamental analysis typically focuses on long-term economic cycles and trends, potentially missing out on short-term trading opportunities.
5. Political Instabilities: Unexpected political events, like elections, conflicts, or diplomatic tensions, can have sudden and significant impacts on a stock value.
6. Global Events: Natural disasters, pandemics, or major technological breakthroughs can all have unforeseen effects on the stock market, making predictions based on fundamental analysis challenging.
7. Market Perception: Even if all fundamentals point towards a particular trend, market perception and investor sentiment can drive the market in the opposite direction.
8. Lagging Nature: By the time certain economic indicators are published, the market might have already reacted, making it a lagging tool.
By understanding these limitations, traders can complement their fundamental analysis with other techniques to make more informed decisions in the forex market.
Conclusion
Fundamental analysis is pivotal for traders who aim to make judicious decisions in the financial landscape. It extends beyond just scrutinising financial statements, encompassing the assessment of crucial ratios, metrics, and the overarching economic and industry environment to gauge an asset's inherent worth. FXOpen enhances this analytical journey with its suite of resources.
You can combine fundamental and technical tools on the TickTrader platform to conduct a comprehensive analysis, allowing you to navigate the intricate realm of financial markets with bolstered confidence and insight.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
AAPLD trade ideas
1 Month Chart - Magnificent Dump in the next YearAnyone who trades crypto is familiar with this breakout channel that leads to a dump.
Every Pension Fund, Mutual Fund, Retail Investor, etc is holding onto Apple and 6 other stocks.
When the tide turns it'll be quick, just like the Nifty 50 dump some decades ago.
Take profits before the end!
You'll know the end when there's some incredibly bullish news on Apple after it hits the top of the channel - That will be your exit liquidity.
AAPL Bearish Elliot WavesThe case for us being in the completion of bearish Elliot waves on AAPL is compelling.
AAPL has rallied about 1,000% over the last 10 years and we can sub-divide this nicely into the different sections we'd expect to see in Elliot wave and we also have the common news cycles and characteristics of the different waves. All syncing up nicely over a long period of time. Quite notable.
The 2022 drop could have been wave 4. Here's a post from the time talking about the possible wave 4 and spike to a new high.
Upside forecast on that was quite accurate. If it was accurate because the EW forecast is right -then we're somewhere in a top. Maybe top already made.
The possibility of an AAPL top is completed by the big pending AB=CD pattern. This is a pattern commonly found at the end of trends. Indeed, it was how AAPL topped the last time.
Here's a post from the 2022 top.
The Elliot waves playing out would give a dire near term forecast for AAPL. Most bullish version of the move would expect a spike out of wave 4 low and then the new rally. Around 50% lower than we are today. In the bullish scenario this would be a two leg correction. Forming the ABC and ending the correction.
In a more bearish scenario we should see wave A breaking the low of wave 4. This would forecast a far worse crash in the C leg (Although both models generally agree with a bounce when breaking 2022 lows).
AAPL getting tired here SELL+++First target is $214.96 second $210.81 then revisit. Buffet sold why are you buying this overpriced un-innovative company since Jobs passed they continue to regurgitate the same iteration of the same products, sales are slowing, AI blah blah blah,..... I'd expect some serious turbulence and shaky hands with the seasonality and upcoming election
APPLE Stock 22% Gain - Profit Target 2 Reached!The APPLE stock price crosses over the Risological swing trader dotted line on on May 3, 2024 giving us a clear bullish trade setup.
LONG Trade Setup
Entry 185.5
Current trailing stop loss at : 203.6
Overall gain from the entry: 22%
Last profit target is at 254.5
Congratulations, who made profit!
APPLE: Short Trade with Entry/SL/TP
APPLE
- Classic bearish formation
- Our team expects fall
SUGGESTED TRADE:
Swing Trade
Sell APPLE
Entry Level - 228.86
Sl - 233.94
Tp - 219.13
Our Risk - 1%
Start protection of your profits from lower levels
❤️ Please, support our work with like & comment! ❤️
Total valuation for top tech, visualizedApple: $3.4T
Microsoft: $3.0T
Nvidia: $2.9T
Google: $2.0T
Amazon: $1.8T
Meta: $1.3T
Combined market cap: 14T+
AAPLApple Inc. is an American multinational corporation and technology company headquartered in Cupertino, California, in Silicon Valley. It is best known for its consumer electronics, software, and services.
It's time to bite the appleI see the minimum drop at 180, but nothing prevents it from going down to 160, at least from there I would start to buy again.
Thing could get ugly for apple Ill argue my last breath on apple but pattern seems to tell a better story and would expect a strong dip before earnings followed by a bigger dip on earnings... apple under 200 again?
Elliott Wave Analysis on Apple (AAPL) 5 Waves Rally Favors BulliShort Term Elliott Wave in Apple (AAPL) suggests pullback to 195.99 ended wave IV. The stock has turned higher in wave V with internal subdivision as 5 waves impulse. However, it still needs to break above previous wave III peak at 237.23 on July 15 to rule out a double correction. Up from wave IV, wave (1) ended at 213.5 and wave (2) pullback ended at 201.07. The stock nested higher with wave 1 ended at 214.25 and pullback in wave 2 ended at 210.64. Stock then resumed higher in wave 3 towards 227.98 and wave 4 ended at 224.80. Final wave 5 higher ended at 228.34 which completed wave (3).
The stock then pullback in wave (4) with internal subdivision as a double three Elliott Wave structure. Down from wave (3), wave W ended at 223.9 and wave X ended at 228.22. Wave Y lower ended at 223.3 which completed wave (4) in higher degree. The stock has turned higher in wave (5). Up from wave (4), wave 1 ended at 229.86 and wave 2 pullback ended at 225.53. Wave 3 higher ended at 232.92 and wave 4 pullback ended at 229.30. Expect the stock to end wave 5 and this should complete wave (5) of ((1)) in higher degree. Afterwards, the stock should pullback in wave ((2)) to correct cycle from 8.5.2024 low in larger degree 3, 7, or 11 swing before it resumes higher. Near term, as far as pivot at 195.99 low stays intact, expect dips to find buyers in 3, 7, 11 swing for further upside.
Optimizing Buy Strategies for Apple Inc. (AAPL) StockOptimizing Buy Strategies for Apple Inc. (AAPL) Stock
Description:
Unlock the potential of trading Apple Inc. (AAPL) with this comprehensive guide, focusing on key fundamental factors that can drive the stock's performance. This approach equips you with the necessary insights to make well-informed buy decisions in one of the world’s most influential companies.
Fundamentals Overview:
1. **Revenue and Earnings Growth**: Keep track of Apple’s quarterly earnings reports and revenue growth. Strong sales of key products like iPhones, MacBooks, and services can signal a healthy performance and positively impact the stock price.
2. **Product Launches and Innovations**: Apple’s product pipeline is crucial to its market position. Upcoming launches, innovations in technology, and expansion into new markets or services can be significant catalysts for stock price appreciation.
3. **Market Share and Competitor Analysis**: Analyze Apple’s market share within the tech industry, especially in smartphones, wearables, and services. Understand how Apple positions itself against competitors and how shifts in market dynamics could influence its stock performance.
4. **Macroeconomic Factors**: Consider the broader economic environment, including consumer spending trends, supply chain challenges, and currency fluctuations. These factors can affect Apple's revenue and profitability, thus impacting stock valuation.
Disclaimer:
Investing in individual stocks, including Apple Inc. (AAPL), carries risks and may not be suitable for all investors. Stock prices can be volatile and are influenced by a wide range of factors, including market conditions, company performance, and macroeconomic variables. It is important to conduct thorough research, consider your financial situation and risk tolerance, and consult with a financial advisor before making any investment decisions. Past performance is not indicative of future reference
AAPL: Buy ideaBuy idea on AAPL as you can see on the chart if we have the breakout with force the resistance line by a big green candle follow by a large green volume.
Apple is a great buy once it exceeds 240!
The stock experienced an extended period of consolidation, during which it formed several bullish chart patterns, including the Double Bottom and Rounding Bottom.
After the price broke above the neckline of the Rounding Bottom, the stock surged to reach an all-time high close to the 237 level.
Since then, it has retraced nearly 17%-18%, returned to its support level.
Now, with a robust rebound underway, the stock is approaching its resistance zone, and there are strong expectations for a significant breakout.
The optimal buying opportunity lies just above the 240 level.
Start of wave CI am not an expert and would like an expert opinion on my analysis.
I see a start of wave C formation and we should go down to 187-193 region.
AAPL BUY $223 first targetAAPL filled the gap after ER, is holding over $213 and forming a wedge we should take out $223 in coming days
Apple price fall because of S&P 500 correction to 3900 range.Trade at your own risk.
Apple since 2003 price at USD0.32 has breakout to USD197 at the recent peak. The stock is currently having a correction since S&P 500 is also having a correction from peak 4605 to around 3900 to 3850. 15% correction.
Apple current price USD166.89 will drop to the 4 hours support level at USD161.41. If there is a breakout, then the price will head to USD142.23 at 1 day support level. The price will not drop to USD112.77 the 1-week support level as we are near the November 2023 FOMC Feds meeting. Most likely there will be good news and an emergence of a strong tailwind for the market after the meeting.
Impossible for the share price to drop to USD 24.41 on the 1-month support level.
Recommend a buy at USD142.23 level on technical Analysis perspective.
USD166.89 will be this week or next week bottom price. Might or might not breakout depending on the outcome of the FOMC Feds meeting.
Apple (AAPL): Swing Entry on the HorizonLast time, we narrowly missed the entry on Apple by just a few dollars, and after that miss, the stock no longer presented a compelling opportunity, so we decided to wait. However, after observing from the sidelines for a few months, it seems that another chance to secure a profitable swing entry might be approaching.
To increase our confidence in this potential opportunity and secure a better entry point, we need to closely monitor further movements from this tech giant. The current price action strongly suggests that a flat pattern might be forming following the recent drop. If this flat pattern does materialize, it could manifest as either a regular flat or an expanded flat, and this will be crucial in determining our entry target zone. At this stage, the area between $200 and $180 seems the most probable and attractive for a potential entry.
Given the broader market trends and Apple’s recent performance, this zone could offer a favorable risk-reward ratio. We’ll be watching for any developments that confirm this pattern and provide a clearer signal for entry. Stay tuned for further updates as we refine our strategy and prepare for a possible move on Apple.
Apple Getting Tight and SetupNever owned an iPhone or Mac but I have many model NASDAQ:AAPL charts from back when this stock was young with earning and sales growth firing on all cylinders.
The stock is holding very well in comparison to its mega siblings
Apple🍎Apple
🍎 Apple never stops amazing us, they recently announced their new iPhone, which includes "Apple Intelligence," a collaboration with chatgpt to integrate AI in a unique way, additionally, this iPhone will feature the new A18 Pro processor, which will be exclusive to this model and available for upgrade on the iPhone 15.
📱 Over the past five years, we’ve seen something cool with Apple’s stock when they launch a new iPhone, initially right after the launch, the stock tends to drop or stay flat because the initial reaction is often somewhat negative.
📈 But here’s the interesting part, in the 60 days following, the stock usually recovers and rises, unless the new iPhone proves to be less impressive than expected.
📊 In this case, things could be different, expectations are high because apple’s new release promises to be super innovative, it’s expected that apple Intelligence and the upcoming update cycle will push NASDAQ:AAPL market capitalization to over $4 trillion by 2025. This could change the pattern of the past 5 years and make the stock behave differently.
👎 Pessimistic view
📉 Berkshire Hathaway just cut its position in NASDAQ:AAPL by nearly 50%, selling off 380 million shares but be careful, this doesn’t necessarily mean the stock will fall just because they’re taking profits, here’s some interesting data, the iPhone has fallen out of the top 5 smartphone sales in china, which isn’t very positive, also Apple has provided guidance for Q4 2024, which doesn’t show growth acceleration compared to the previous quarter, and the most relevant recent change luca maestri, Apple’s CFO, will step down on january 1, 2025, and will be replaced by kevan parekh, the current planning and financial analysis.
▪️This change could make investors nervous, as Maestri has been key in managing the company’s finances, we’ll need to consider this if we’re thinking about a bullish stance on the stock.
🔹Target Prices
▪️Highest $300
▪️Average $247
▪️Lowest $186
🔹Price Analysis
👨💻 In april NASDAQ:AAPL stock hit an annual low of $164, but then had a significant rebound, rising around 45% to reach $247, marking an annual high, after that it fell back 17% to $195, and then had a 15% bounce, reaching $228 between July 16 and 17.
▪️However, there was a small drop of -4 dollars, approximately -1.60%, which has not yet been recovered, i believe the price could continue to rise to cover that pending gap of 233, and then hit a new high before starting to retrace on the chart, i’ve marked the movement I’d like to see for this week, and on friday 30, a move of 5 dollars is expected, either up or down. If it’s up, it could be just the fill of the pending gap, which I think is the most likely scenario, additionally, there is a medium term gap that almost no one is considering, between 173 and 180, created from May 2 to 3.
🔹Studies
📐RSI
▪️ 60
📐MACD
▪️ Moving Average Convergence/Divergence 2.30 showing bullish movement
▪️The moving average of the MACD 1.20 accompanying with a bullish movement in volume
🤔 Do you think Apple’s new tech will be a game changer?
Apple 🍎Apple
🍎 Apple never stops amazing us, just when we thought they couldn't top themselves, they launch a new update that captivates us and makes us want to get our hands on it right away, they recently announced their new iPhone, which includes "Apple Intelligence," a collaboration with chatgpt to integrate AI in a unique way, additionally, this iPhone will feature the new A18 Pro processor, which will be exclusive to this model and available for upgrade on the iPhone 15.
📱 Over the past five years, we’ve seen something cool with Apple’s stock when they launch a new iPhone, initially right after the launch, the stock tends to drop or stay flat because the initial reaction is often somewhat negative.
📈 But here’s the interesting part, in the 60 days following, the stock usually recovers and rises, unless the new iPhone proves to be less impressive than expected.
📊 In this case, things could be different, expectations are high because apple’s new release promises to be super innovative, it’s expected that apple Intelligence and the upcoming update cycle will push NASDAQ:AAPL market capitalization to over $4 trillion by 2025. This could change the pattern of the past 5 years and make the stock behave differently.
👎 Pessimistic view
📉 Berkshire Hathaway just cut its position in NASDAQ:AAPL by nearly 50%, selling off 380 million shares but be careful, this doesn’t necessarily mean the stock will fall just because they’re taking profits, here’s some interesting data, the iPhone has fallen out of the top 5 smartphone sales in china, which isn’t very positive, also Apple has provided guidance for Q4 2024, which doesn’t show growth acceleration compared to the previous quarter, and the most relevant recent change luca maestri, Apple’s CFO, will step down on january 1, 2025, and will be replaced by kevan parekh, the current planning and financial analysis.
▪️This change could make investors nervous, as Maestri has been key in managing the company’s finances, we’ll need to consider this if we’re thinking about a bullish stance on the stock.
🔹Target Prices
▪️Highest $300
▪️Average $247
▪️Lowest $186
🔹Price Analysis
👨💻 In april NASDAQ:AAPL stock hit an annual low of 164, but then had a significant rebound, rising around 45% to reach 247, marking an annual high, after that it fell back 17% to 195, and then had a 15% bounce, reaching 228 between July 16 and 17.
▪️However, there was a small drop of -4 dollars, approximately -1.60%, which has not yet been recovered, i believe the price could continue to rise to cover that pending gap of 233, and then hit a new high before starting to retrace on the chart, i’ve marked the movement I’d like to see for this week, and on friday 30, a move of 5 dollars is expected, either up or down. If it’s up, it could be just the fill of the pending gap, which I think is the most likely scenario, additionally, there is a medium term gap that almost no one is considering, between 173 and 180, created from May 2 to 3.
🔹Studies
📐RSI
▪️ 60
📐MACD
▪️ Moving Average Convergence/Divergence 2.30 showing bullish movement
▪️The moving average of the MACD 1.20 accompanying with a bullish movement in volume
🤔 Do you think Apple’s new tech will be a game changer?
Apple: Near the summitApple should be on the last meters of the turquoise wave B. As soon as the high is established, we expect a final sell-off. For the end of the corrective movement, we have added a magenta-colored Target Zone (between $192.02 and $172.34) to the chart. Investors could establish long positions there, with stops placed around 1% below the lower edge. With the low in place, we expect a rise above the resistance at $254.30. Should this level be broken earlier, our alternative scenario (34%) will come into play. This wave count sees the last local low as the low of the magenta wave alt.(2).
AAPL OutlookPAIR:
Bullish Outlook:
AAPL /Apple Inc. has been breaking into new highs on our Weekly, Daily, and 4hr time frame. I would like price to create a new HH and then make a valid pullback HL followed by 1 of our Valid Engulfing Patterns while staying above the 50ema.
