everyone thanks for checking out this video my name is Travis Rosen the
creator of the master the market education you can find a link below in
the description and this is going to be part four of the day trading stocks for
beginners series that I'm doing here on my channel so if you're brand new to the
market and you want to start off with the basics I recommend starting off with
part one and gradually going through the rest of the parts because it's going to
gradually get a little bit more advanced in each part of this series so anyway in
the last section we started talking about some of the basics of technical
analysis which is of course things like candlesticks chart patterns chart
indicators and so on and so forth and now in this one we're going to go ahead
and get into what is known as fundamental analysis so fundamental
analysis is the analysis type using a business's financial statements this is
going to be your revenue operating expenses net profit and so on and so
forth anything that you find on a company's balance sheet or within their
SEC filings is really going to have to do with fundamental analysis and with
that being said fundamental analysis is generally going to be used a little bit
more for longer term investing but as day traders or even swing traders it's
still very important to know some of the basics of fundamental analysis and to
actually do some fundamental analysis before you place your trades
now with that being said some of the websites you can use for fundamental
analysis are SEC gov or BAM SEC comm for things like your SEC filings and then
you can always just use something like Yahoo Finance to look into a company's
recent news or press releases so personally this is actually how I do all
of my fundamental analysis I use BAM SEC calm to look into their SEC filings and
then many times I'll go over to Yahoo Finance to look into recent news and
press releases and I actually do this before I place every single one of my
trades and then of course I'll go ahead and move on to some technical analysis
which is going to actually help me find the best entries and exits on my trade
now when we're talking about fundamental analysis there are quite a few different
filing types that you're going to see when you're looking into SEC filings so
without overwhelming you I wanted to go over some of the most important ones and
some of the ones that you're going to see most commonly when you are doing
your fundamental analysis and the first of those is what is known as a 10k
filing and this is going to be an annual report required by the SEC that gives a
comprehensive summary of the company's financial performance over the past year
so in short these are the annual earnings reports that the company puts
out once a year going over how well that company performed in the past twelve
months I mean if you stay tuned later on in this video I'm gonna go over to BAM
SEC comm and we're gonna go ahead and look through some of these different
filing types and I'm actually gonna give you some ideas of what you want to look
for in these 10k and 10-q filings that will help you determine whether the
company is performing well financially or if they're struggling financially and
because of that their stock is probably going to struggle to perform well also
anyway the next filing type that we see very often is a 10-q filing and this is
a little bit different from the 10k because a 10k is again released once a
year and is going to be the performance over the past year and the 10 Q stands
for the quarterly earnings report which is of course the quarterly report
required by the SEC that gives a comprehensive summary of the company's
financial performance over the past three months and the next filing type is
the a K filing which is different from the 10k and 10-q
because this is actually not going to be an earnings report any time you see an
ache a filing that is a filing notifying investors of important events or news
released by the company okay so anytime a company puts out news for example
maybe they got a new patent on one of their products maybe they have some kind
of news from the FDA about one of their drugs or treatments or any kind of news
along those lines that is going to be put out in an 8k violence so like I
mentioned on one of the previous slides you can always go to something like
Yahoo Finance to find press releases and news but realistically you can actually
just stay on a website like SEC gov or BMS and see calm and look for a.k
filings and those are going to be any recent news or press releases put out by
the company
now moving on from those filing types there's another thing that you always
want to look for when you're looking into a company's fundamentals and when
you're actually diving into their actual filings themselves and that is what is
known as dilution dilution essentially decreases existing shareholders
ownership due to the company issuing new equity basically what that means is
dilution can be a big red flag if you're planning on buying the stock even if it
is just for a day trade on the other side of the spectrum dilution can
actually work in your favor if you're somebody that is planning on short
selling the stock and the reason for that is because dilution is going to
drive the price of the stock down because all of this new equity is being
sold into the market and that is of course going to add to the supply and
since the market moves based on supply and demand all of that extra supply is
going to push the stock down and down and down and as a short seller you're
going to profit from the stock actually going down so of course in that case
dilution would work in your favor otherwise again it can be a red flag and
should probably tell you to stay away from the stock in general or look to
actually trade the other side of it by short selling now with that being said
there are a few ways that you can look into the company and see whether or not
they're actually diluting or if they have a history of dilution and the first
of those is to go back and look into the SEC filings one of the filing types that
you're going to see that can indicate to you that the company is diluting or at
least has a history of dilution is an s3 which is known as a shelf filing so a
show of filing states that the company may offer to sell a specified amount of
shares warrants or other security types so in short this means that the company
can dilute in the future okay then following the s3 you're going to see
something like a 4 to 4 B 3 or a 4 to 4 B 5 filing and these are going to be
required by the SEC in order for the company to actually offer shares to you
to loot so generally what you're going to see is an s3 filing stating that
maybe the company may sell up to 100 million dollars of shares over the next
five years now in order for the company to actually start selling those shares
they have to put out a 4 to 4 B 3 or four to four b5 filing and generally
that's going to say that they are offering to sell maybe 20 million
dollars worth of shares in this current offering and because in that offering
example they only sold twenty million dollars worth of stock that means that
there can be multiple other four to four be three or four to four b5 filings to
follow up with that s3 to sell the extra eighty million dollars worth of shares
that they're able to sell based on their s3 filing okay so I know it can be a
little bit confusing but trust me even if you just know the very basics of
whether or not the company is diluting shares that's going to put you at a big
advantage over a lot of your competition and at the end of the day is probably
going to keep you from buying heavily diluted stocks that would probably end
up turning into a loss once you begin to understand dilution a little bit better
you can actually just look at some of the stocks longer-term charts like the
one we have here on this slide and you can get an idea for whether or not the
company has diluted in the past or is even currently diluting so if we take
this example here we have the stock dpw and we're looking at the one-year
one-day chart so this is the entire year but each of the candles on the chart is
only representing one day of price action now when you're looking at a
long-term chart like this one big red flag that can indicate to you that the
stock is diluting is first that the stock is in a major long-term downtrend
you can see that early on in the year on the left side of the chart the stock was
well over $10 per share and at times it was even all the way up to $14 per share
and on the right side of the chart at current day when the screenshot was
taken but all the way down to $1 in 66 cents now a long-term downtrend doesn't
always mean dilution but when it's this strong of a downtrend and it's
especially in a pen stock that pretty much always means that the company has
at least diluted in the past if they're not currently doing so now the other
thing you want to look for that can indicate dilution is that the stocks
failed to hold gains when they do spike up or when they do gap up and you can
see that happens multiple times on this chart I'm so if I go ahead and escape
here just to show you what I mean early on on the left side here the stock
gapped all the way up to about $14 per share and the very same day it closed
all the way back down much where it closed out the previous
day you can see that happens multiple times when it gaps up it fails to hold
those gains and it comes all the way back down and on this day it spikes all
the way up it closes pretty strong that day but the following day it comes
pretty much all the way back down once again and again on this day again on
this day and on this day and once again on this day so this happens time and
time again every time the stock starts to pick up some momentum and either
spike up intraday or gap up in premarket or after-hours it fails to hold those
games and pretty much comes straight back down which can be a big sign of
dilution okay now before getting into some of the ideal fundamentals that you
want to see when you are doing fundamental analysis and you're looking
for a good opportunity to buy into a stock based on their financials I just
want to go over to BAM sec comm and kind of explain to you how it works and how
you can use this to look into SEC filings so first and foremost I'm going
to go ahead and just search in random stock we'll go ahead and take Apple for
example and you can see here on BAM SEC com they actually separate the filings
into different categories so up here we have the financials and these are going
to be your 10 Q filings or your quarterly earnings reports and then of
course your 10 K filings which are your annual earnings reports and all you have
to do to actually look into those filings is go ahead and click on them
and you can scroll down and look into things like their revenue operating
expenses net sales earnings per share operating income I mean any other
fundamental analysis that you want to do you're going to be able to find all of
that information within these financial reports now because these are such big
filings you can see that I can just scroll and scroll and scroll through
these one thing that I like to recommend people to do if you're looking for
something in particular if you're on a Mac all you have to do is
hit command F and I believe it's just ctrl F if you're not on a Mac and that's
going to pull up this little search bar on the top right side of your screen and
now if you're looking for something like revenue all you do is search revenue up
in that search bar and it's going to highlight every time that the word
revenue is mentioned within this page so I can go ahead and scroll through
here
and doing that can save you a ton of time when you're looking through these
large filings you're not going back we have the financials again there and over
here on the right side we have the news and you can see that these are of course
all 8k filings down here we have what are known as prospectus 'as in
registrations and this is actually where you're going to see dilution in the
stock so anytime there's an S 3 or 4 to 4 B 3 or 4 to 4 B 5 telling you that
there is probably dilution in the stock you're going to see that under the
prospectus is in registrations so for example if I go to a penny stock
let's take SPE X which was a recent runner in the market and you can see
right off the bat down here prospectus is in registrations there are multiple 4
3 4 B 5 filings and if we go ahead and extend this you're gonna see probably
even more all of which is going to tell us that the stock is diluting at the
time because this was such a recent one and also has a history of dilution
because there has been four to four B 5 and s 3 filings for years and years and
years in this stock and of course to get details of those offerings in that
dilution all you would do is go ahead and click on that I mean in this case
this is an offering for 2,000,000 90999
on investing or buying into the stock what can actually work in your favor if
you are short selling now with all that being said I want to go over some of the
basic things that you may want to look for if you are planning on buying or
investing into a stock and the first thing that many investors look for is at
least 25% earnings per share or EPS growth in the past quarter and over the
past three years in just a moment I'm actually going to show you how you can
screen the market to look specifically for stocks that meet this criteria and
that's going to save you a ton of time from scanning the market and then having
to go into their SEC filings and seeing whether or not the company is growing
both quarter-over-quarter in year over year but anyway what this information
tells us as potential investors is that the company is going to fundamentally
and consistently so because of the fact that we're not just looking over the
past quarter we're also looking over the last three years this tells us that
their growth is not just a fluke and that this is actually a growing company
that is getting stronger and stronger and that is performing well and of
course their stock is likely to follow assuming that growth is going to
continue the next thing you want to see for ideal fundamentals is at least 25%
institutional ownership and the reason for this is simple if these
multibillion-dollar institutions are buying into the stock and they believe
in the company and they believe in the future of the company that again is a
big bullish sign and many times you can actually have a great trade or
investment by following in the footsteps of these institutions and buying into
the stocks that they're also buying into it
so to find stocks that are meeting both the institutional criteria and the
financial growth criteria you can use something like fin viscom which is a
free screener and all you have to do is go to fin
viscom pull up the screener here and since we're focusing on fundamentals
we're just going to go ahead and select fundamentals but if you want to also
screen for technicals you can go ahead and select technicals or just all so if
we want to look for an EPS growth this year again we want to make sure that
it's at least 25% so we're going to put over 25% then we want to select EPS
growth corridor over quarter and change this also to 25% we can go ahead and
select institutional ownership will say over 20% and each time we put one of
these pieces of criteria into the screener it's going to narrow the market
down to stocks that are meeting only what we're searching for now you can see
we have a total of 539 stocks right now which is still quite a bit so just to
narrow this down a little bit more I'm going to go ahead and select all and
we're going to go ahead and add in some technical settings in here as well we of
course have to make sure these stocks have enough volume for us to actually
trade so we'll make sure the current volume is at least 100,000 shares
we'll also put in the average volume of at least 100,000 shares as well and
that's but not least let's say that we want to look for stocks that are under
$10 per share so this narrow the entire market all the way down to just 100
different stocks and of course that is still quite a few stocks and if you're
looking for investments or trade opportunities you're going to want to
narrow that down even more but I hope this gives you a good idea of how you
can use this free screener to put in some fundamental and technical settings
to scan for stocks that are meeting your specific criteria
anyway that is going to be a wrap on the basics of fundamental analysis if you
enjoyed please make sure to give this video a like and subscribe to the
channel so you don't miss out on part 5 of this series by the end of this we're
going to get into some actual trading strategies that will hopefully help you
make some profits with your own trading and as always if you want to take your
education a step further and learn everything from the basics to the
strategies that I use to trade a full time make sure to visit the first link
down below in the description to visit my website master the market on there
you'll learn to you day trade swing trade and even longer-term invest you'll
be given access to 70 practice quizzes to make sure that you're actually
understanding all of the education that's given to you and of course you'll
be given access to our trading chat room with over a thousand other active
traders but anyway thanks again for watching I hope you enjoyed and I'll see
you in part five