first read up on the company. look at quarterly reports and news pertaining to the company in general. Example: ntdoy (nintendo) i did some research on nintendo and it turns out the reason whty they sell games for 50 instead of 60 is because they dont need ot spend as much money as the other guys on making the perfect looking game. With ps3 and xbox 360 they generally make games that are 1080i/p (1920x1080 resolution) where as nintendo is 480 p. This means they dont have to spend their time making high res textures and an insane amount of detail into the textures and product in general because at a lower resolution its harder to see all the bells and whistles anyway and this makes games more profitable. the main thing that got me into nintendo wasnt even the cost per game for developers so much as it was the fact that they made 50 dollars per system at launch (speculative number based on an estimate from an article i read online at launch november 2006). PS3 and xbox 360 lost money per system at launch with ps3 losing 125-200 a unit and xbox 360 about 100 as well. This means that nintendo from the get go was making bank right out of the box. currently there are 25 million wiis sold and that profit per system has no where to go but up as they have kept the system atg the same price that they launched with a year and a half ago.
a tool i use: http://www.scottrade.com/LP/smart-text/
so as far as other stocks.
1. whats their track record on their quarterly reports? are they beating estimates? are they coming up short?
2. What is their P/E compared with others in the sector?
3. read news on the stock constantly! i generally spend at least an hour a week looking for news on any given stock i hold.
some wisdom to go by:
1. dont go in all at once.
2. never put all your eggs in one basket
3. always be willing to admit youre wrong
4. IF YOU CANT CONVINCE YOURSELF THAT ITS A GOOD COMPANY THEN DONT BUY IN.
5. buy what you know.
6. theres no logical reason ot jump in a stock unless you are comfortable. i suggest flagging some stocks and watching it if youre new at the game.