Mad Money Mailbag: Homework 101

Cramer tells a viewer what must be known before buying a stock, and where to find the information.
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Editor's note: The following are questions received from viewers of "Mad Money," seen every day at 6 p.m. EST on CNBC.

How should investors go about "doing their homework" on a stock?-- Alvin from Florida

Jim Cramer

: I generally like to start out by reading analyst reports on a company, but not everyone has fast, affordable and easy access to those. Don't fret. There are several free tools available on the Web to help investors research a company in about an hour.

First, read through the company's Web site. Get a feel for what its business is, who the customers are and who its competitors are. Don't forget to stop by the investor relations page for a look at the financial statement, including a look at either the entire press release, if not the 10-Q or 10-K filing from the most recent quarter.

Next, go through some recent news articles, either on the company's Web site or an investment site like

TheStreet.com

. Also take a look at the company's valuation, especially compared with its peers.

Whether in your head or on a piece of paper, make a list of pros and cons. If one of these columns seems much longer than the other, you may be on the verge of finding a new stock to buy or sell.

Want more Cramer? Check out Jim's rules and commandments for investing from his latest book by

clicking here

.