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Fundamental Analysis: presentation
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Unlike technical analysts, fundamental analysts try to buy stocks that are priced below their potential value by assessing the value of a company's assets or its expected earnings power.

Professional analyst from the financial sector can use other ways to evaluate a company: talking to the management or evaluating (macro & micro) economic factors. However only a few individual can study the stock market that way.

Some analysts analyze the company's balance sheet to determine the the value of the company and try to buy the stock at a price lower than the liquidation value or at a low price compared to the valuation of the net assets of the company.

Other fundamental analysts focus on  the expected future earnings of the company and try to buy the stock at a low price compared to the future earnings (low PE: price earning ratio).

The terminology used by the two schools are different. The technical analysts talk about 'Overbought' or 'Oversold', fundamental analysts talk about 'Overvalued' or 'Undervalued'.

OVERVIEW

We will try in this section to give you a brief overview of the fundamental approach. The following subjects will be introduced:

• Balance sheet analysis.
  • Introduction to the balance sheet.
  • Limitations of the balance sheet.
  • Analyze the balance sheet.
    • Current ratio.
    • Working capital.
    • Debt Equity ratio.
    • Book Value.
• Earnings analysis.
  • Earnings per share.
  • Price earning ratio.
  • Cash flow.
• Winning companies investments.