The Finance Professor: Fundamental Stock Trading

• Financial Statements: In a previous installment, I covered where to find financial statements and what to look for in them. At a minimum, make sure you read the most recent annual report and the two most recent quarterly reports.
• Conference Calls: I also covered how to approach listening to a company's quarterly conference calls (or earnings calls). Many companies have archives of these calls online. Listen to the two most recent earnings calls. Otherwise, there are some services from which you can purchase conference call transcripts. (You can supplement this with expert analysis of the calls on TheStreet.com or RealMoney Silver.)
• Press Releases and News: Do a search on TheStreet.com or other financial news Web sites and read all the press releases, news items and commentary for the company that have been published since the last earnings report.
• Analysts Reports: Review as many analysts reports as you can. However, here are two important caveats: Make sure the report is recent and stick to analysts with a solid reputation for coverage of that company or industry. Look for the "axe" in the name. The axe is the go-to analyst with the best historical call on that stock.
• Historical Data: The Street.com Ratings provides some excellent historical metrics for individual stocks. That site goes one step further and provides a letter rating based on its own proprietary modeling system. For example, click here to see the rating for McDonald's (MCD - Cramer's Take - Stockpickr).
• Analysts Estimates: Wall Street analysts provide clientele with their estimates for EPS and revenues . This data is then accumulated by information providers and an average (or consensus) estimate is then calculated. This consensus then becomes the basis for the "earnings expectation," which is often talked about on TheStreet.com and in the financial media.

With all of the above data, you can start to determine if a company's stock is a fundamental buy, hold or sale (or perhaps even a short-sale). But before you can do that, you need to first get comfortable with all these different sources of information. So, here is some homework that will help you learn the ways of the fundamental investor and analyst:

• For your favorite public company, obtain all of the data I listed above and carefully read (or listen) through it all.
• Investigate what the TheStreet.com and TheStreet.com Ratings have to say to about the company.
• Check out a copy of Graham and Dodd's Security Analysis at your local library or obtain a copy online. (When studying toward my MBA at New York University, I used the Cottle, Murray, Block edition.)