I evaluate stocks in 3 steps: Step 1. Look At The Numbers First of all I have a look at a company’s balance sheet. When I am looking at a company’s balance s

I evaluate stocks in 3 steps: Step 1. Look At The Numbers First of all I have a look at a company’s balance sheet. When I am looking at a company’s balance sheet I am using the Current Ratio and Acid Test Ratio to assess its liquidity, looking at its Long Term Liabilities (in particular I’m looking at if they are growing at a faster rate than assets), its Debt-To-Equity Ratio and its book value. If they look good then I will have a look at the company’s income statement. The first thing I look at is its Earnings, COGS, EPS and ROE (I also calculate the P/E Ratio and PEG Ratio) Step 2. Look At The Competitive Advantage I assess the company’s competitive advantage in particular; I have a more in-depth look at it to see if the company has a large enough advantage to keep its stay above the competition and benefit from the increasing profits. Step 3. Look At The Company’s Culture/Integrity Finally, I look at the company’s culture and its integrity. I’m interested in company’s who have a strong company culture and are interested in creating long-term shareholder value.