When you buy stocks online, it’s important to understand the type or category of the company before investing. Here’s a clear process to help you classify and analyze companies for better, easier investment decisions:
1.
Identify the Sector and Industry
Every company belongs to a sector and a specific industry.
Use platforms like Yahoo
Finance, TradingView,
or Morningstar
to check this info.
|
Example
Ticker |
Sector |
Industry |
|
AAPL
(Apple) |
Technology |
Consumer Electronics |
|
VTI
(Vanguard Total Stock Market ETF) |
ETF |
Broad Market Index |
|
SCHD
(Schwab Dividend Equity ETF) |
ETF |
Dividend-focused Fund |
2.
Check the Market Capitalization (Size)
Companies are classified by market cap, which indicates their size and
stability.
|
Category |
Market
Cap |
Example |
|
Large-Cap |
$10B+ |
Apple (AAPL) |
|
Mid-Cap |
$2B–$10B |
Etsy (ETSY) |
|
Small-Cap |
$300M–$2B |
Upstart (UPST) |
3.
Look at the Business Model
Understand what the company does and how it makes money:
- Technology –
Apple, Microsoft
- Finance – JPMorgan
Chase, Schwab
- Healthcare –
Pfizer, Moderna
- Consumer Goods –
Coca-Cola, Procter & Gamble
4.
Analyze Risk and Growth Potential
Classify the stock by its investment style:
- Growth Stocks –
High potential for growth (e.g., Tesla, Nvidia)
- Value Stocks –
Undervalued but stable (e.g., Coca-Cola, Johnson & Johnson)
- Dividend Stocks –
Pay consistent dividends (e.g., SCHD, AT&T)
5. Use
Stock Screeners
Use tools like:
- Yahoo Finance Screener
- Morningstar
- TradingView
- Schwab, Fidelity, or TD
Ameritrade platforms
You can filter by sector, market cap, dividend yield, P/E ratio, and risk level.
6.
Check the Ticker and Symbol
Each company or fund has a unique ticker symbol to avoid confusion:
- AAPL
= Apple
- VTI
= Vanguard Total Stock Market ETF
- SCHD
= Schwab U.S. Dividend Equity ETF
7.
Verify Through Financial Reports
Read:
- Annual Reports (10-K)
for company strategy and performance.
- Quarterly Reports (10-Q)
for recent financial results.
- ETF Prospectus if
investing in funds like VTI or SCHD.
Would you like me to create a table template you can use to organize and
compare companies before investing?