Stock research checklist
Before you trust a stock idea, know what would prove it wrong.
A convincing story can leave you with unanswered questions about debt, cash flow and the price you pay. Start with six questions that help you separate business facts from assumptions—and record the evidence before making a decision.
A repeatable first review helps you decide what deserves deeper work. Use this checklist to gather evidence, test a valuation range and record what could change your view. This is a research framework, not a buy-or-sell score.
Start with a small evidence file.
Collect the latest annual filing, the latest quarterly update, any subsequent material announcements and the current diluted share count. Keep the document URL, financial period, publication date, currency and units beside each number. A figure labeled “millions” should never enter a per-share calculator unchanged.
For a U.S. public company, the SEC’s EDGAR database is a primary source. Its annual Form 10-K describes the business, risks and financial results. Relevant sections include the business description, risk factors, management’s discussion and the financial statements with notes. Foreign issuers may use other forms. Read the SEC’s 10-K guide or search EDGAR.
A falling price is the start of research.
Before treating a drawdown as an opportunity, require evidence of durable cash flow, a defensible competitive advantage and a valuation supported by conservative assumptions. Record unknowns as unknown; an incomplete review is not a passing result.
- Verify the decline. Record the security, exchange, currency, price date, peak date and whether prices are adjusted. Separate price drawdown from total return.
- Test cash flow. Separate pricing from volume, inspect margins and working capital, and check debt maturities and dividend coverage.
- Challenge the moat. Examine competition, regulation, retention and customer acquisition costs. Do not infer that AI caused a decline without evidence.
- Value cautiously. Use bear, base and bull cases. Compare EV/EBIT with EV/EBIT and P/E with P/E using consistent periods; a lower multiple can reflect lower future earnings.
- Define the next decision. Record recovery evidence, a thesis-breaking condition and a review date. Keep candidates on a research watchlist until the evidence is sufficient.
Save the evidence in Capital & Moat Review, then test your valuation assumptions.
For an operating business, track search dependence, acquisition cost, confirmed email leads, paid conversion, retention and net repeat revenue. Clicks are not purchases.
Six questions to answer in your own words.
Who pays this business, and why?
Describe the customer, the product and the reason a customer returns. List the major revenue sources. Separate a business fact from an attractive story you still need to test.
What has actually improved?
Compare several reporting periods using the same definitions. Look at revenue, operating profit, cash generation and diluted shares. Ask whether growth came from pricing, volume, acquisitions or an accounting change. Read the explanation before assigning a cause.
What could strain the balance sheet?
List cash, debt maturities, borrowing costs and major obligations. Identify how the company funds investment and distributions. A profitable income statement does not answer every liquidity question.
What is the strongest opposing case?
Choose a specific failure scenario: a customer leaves, an input becomes expensive, a competing product improves, or refinancing becomes difficult. Name the evidence that would make that scenario more likely.
What assumptions justify the valuation?
Use the fair-value calculator for positive normalized diluted EPS, or the DCF calculator when you can support equity cash flow per share. Try cautious, central and optimistic cases. Keep the source figures separate from your forward-looking assumptions.
What will trigger another review?
Record the next reporting event or your own review date, plus two measurable changes that would challenge the thesis. “The price went down” and “the business deteriorated” are different observations.
Use a range, then explain the range.
Fictional example: a company earns $5 per diluted share. You assume 8% annual EPS growth for five years, an exit P/E of 18 and a 10% required return. The EPS model gives about $82.11 today. At the same growth and return, exit multiples of 16 and 20 give about $72.99 and $91.23.
The range shows the effect of your multiple assumption. It does not show a probability distribution or set a floor on losses. This EPS model discounts a future share price and excludes interim dividends. A 20% safety discount on $82.11 gives $65.69; that discount is a modeling choice, not loss protection.
Before you rely on the result
These checkboxes are a reading aid; they are not saved or sent. Keep your notes in the Decision Journal. You can also print this guide from your browser.
Keep the process for your next company.
Get the free three-page fillable PDF, save a blank master, and use a fresh copy for each research review. The free checkout asks for your email to deliver the file; no payment is required.
Know someone researching a company? Share this guide: StockMags stock research checklist. Choose a review date in your notes and return when new evidence arrives.
StockMags educational guide · Updated October 4, 2026. Research tools do not determine whether an investment is suitable for you. Investments can lose value.
