What’s actually worth focusing on when researching stocks?
Story
A while ago, I asked about the biggest headaches in stock research (link). After going through 81 responses, this is what stood out (link).
I boiled them down to four big challenges:
- Too much info, not enough clarity – Reports, metrics, news, opinions… what actually matters and deserves sharp attention?
- Valuation struggles – P/E, DCF, comparables—so many methods, but what actually works and how to turn them into real conclusions?
- Understanding moats – Figuring out if a company has a real edge and whether it’ll last.
- Buy/Sell decisions – Even after all the research, pulling the trigger still feels uncertain—a leap of faith.
I personally share these struggles and have been working on making my own process simpler and repeatable.
My Process
Goal: Buy great businesses at a fair price. Process is:
This is how I break it down:
- eval business quality (5-year revenue growth% >10%, ops margin>25%, return on capital employed>10%, and debt/equity ratio<80%) ;
- (I use these to infer moat strength—high % means the company makes what the market wants, has pricing power, and dominates its space.)
- eval price: p/e vs industry (<1x), vs its own history(<1.5x) and price vs dcf (<1x)
Example: GOOG
- business quality (5-year)
- Revenue Growth 13.9% (Goal: ≥ 10%)
- Operating Margin 27.8% (Goal: ≥ 20%)
- Return on Capital 25% (Goal: ≥ 15%)
- Debt / Equity 10.1% (Goal: ≤ 100.0%)
- price fairness (5-year)
- P/E vs Industry 0.64x (Goal: ≤ 1.5x)
- P/E vs Historical 0.99x (Goal: ≤ 1.5x)
- Price vs Fair Value 0.77x (Goal: ≤ 0.8x)
- Decision BUY (7 out of 7 criteria met)
Questions:
What do you think of this process?
How do you deal with these challenges?
What actually helped or didn't help you make better decisions?