I wish to open discussion on what would be considered the most important fundamental analysis considerations for stock trading. It could be your forever buy and hold method or it could be trend following, ie investing short term which may be from a few weeks to maybe a couple of years thereabouts. Fundamentals for day trading I guess is not that important, but there could be a couple of fundamentals which could be handy, discuss day trading fundamentals if you wish. I trade stocks and find fundamentals are a critical component in deciding what to trade. I never use fundamentals for timing, just selection. I use a number of fundamental considerations, some are financial type ratios, others have nothing to do with number crunching. Due to the use in my trading of a range of fundamentals plus technicals, plus using discretion of market mood, I find it impossible to back test my system.
I'll start with one of my key FA considerations, its not financial but about human nature. Later I may add more, I'll wait and see the level of interest from ET before devulging too much too soon. Ok, one of the first things I'm interest to know about a stock is who are the Directors. I want to see some quality, plus I like to see numbers (how many). Directors drive the company, without them and quality plus capitilization, the Co. is going nowhere fast. I go looking for their background, experience, previous roles, age, how many of them, qualifications, nationality, where they currently live (country) and usually will do a news search if I can find any dirt on them. So its pedigree to do the job mainly. For example, if the board consists predominantly of accountants and other pen pushers trying to run an engineering company, well that gets a big red flag. Rule of thumb, the smaller the cap Co. the lower the number of directors. The minimum # of directors is 3 for a listed public company from my understanding. Usually Chairman + CEO + independent. If I hold a stock and discover that one or more of the directors have been dishonest, ie fudging numbers, talking bs, hiding facts, devious with the truth, incompetent, then often I will exit and blacklist the Co off my watchlists. What has been my impression, with many of the small cap stocks, the directors are naturally born bs artists, they are directors of companies who's prime aim in life is to sit on their fat ass, put out glitzy bs announcements with impressive charts of what they could achieve (lure in noobs) and capital raise, year in and out. So in other words, talk a lot of shit and do nothing, often its the older 'hasbeen' directors, failed over many years, near retirement, spent, no energy, they revert to what has always been natural to them as failures, just keep on talking bs to see out their final days and top up their superannuation accounts before they are sent to pasture. Therefore a key red flag on small caps is age. Old age + small cap = danger. Old age does not necessarily define experience which is usable. 3 old men directors + small cap = run the fuck away. A company which consists entirely of younger directors to me is a plus, they have (hopefully) fresh energy!
So I run two watchlist systems, those stocks I'm not going to trade and those which I will trade. As new stocks come onboard via IPO, I will either kick them into banned stocks list or into ok stock list. Every now and again I may remove a stock from one to go into the other, depending on what may have changed. Adding to the above post, younger directors will also be more keen to use new technology than the older generation. I find what not to trade is as important, if not moreso, than what to trade. Lets say the universe you have is a couple of thousand or more stocks. (NYSE or ASX etc). Well you can afford to winnow the list down, a couple of hundred on your buy watchlist should suffice. Therefore I'm keen, ruthless, go hunting for stocks to eliminate. Stock trading has many surprises, you want a bias toward good surprises, not bad surprises, that is, unless you prefer to short stocks, then that's a different kettle of fish.
My favorite fundamentals are when head count is growing but revenue and EBITDA are growing even faster than head count.
%% SAME here except i use ETFs. I read a lot of indicators + business info. I include but not limited to a trend with 200 day moving average ..................................................