Investment research starts with how the business makes money and ends with a thesis that can fail. Read the statements, estimate value under several scenarios, name the catalyst, and write the downside before choosing exposure.

Explain how the business makes money

If you cannot explain the customer, product, pricing, cost structure, and competitive advantage in plain language, keep researching.

Business model brief

Customer and problem solved:
Product or service and pricing model:
Primary revenue drivers:
Largest costs and margin drivers:
Competitive advantage and evidence:
Management incentives and capital allocation:
Industry structure and major threats:

Read the three financial statements together

The income statement shows profitability, the balance sheet shows resilience, and the cash-flow statement tests whether accounting earnings become cash.

Statement	Read first	Red flags to investigate
Income statement	Revenue, gross margin, operating margin, EPS trend	Declining revenue, margin compression, expenses outrunning growth
Balance sheet	Cash, debt, working capital, dilution, goodwill	Debt growing faster than the business, weak liquidity, repeated share issuance
Cash-flow statement	Operating cash flow, capex, free cash flow, financing	Earnings without cash, persistent cash burn, financing-dependent operations

Estimate a range instead of one magic number

Valuation is an assumption system. Compare the company with peers and its own history, then model conservative, base, and optimistic cash-flow outcomes.

Relative

Compare like with like

Use P/E, PEG, EV/EBITDA, or another relevant multiple inside the correct sector and growth context.

Cash

Follow free cash flow

Check free-cash-flow yield and whether cash generation can support the valuation.

Intrinsic

Model scenarios

Project conservative cash flow, terminal assumptions, and a discount rate as a range—not a precise promise.

Margin

Demand room for error

A margin of safety protects against bad assumptions; it does not remove business or market risk.

Write a falsifiable investment thesis

A thesis states why expectations are wrong, what evidence could close the gap, and exactly what would prove you wrong.

Investment thesis

Company / asset and intended horizon:
Variant view: what the market may misunderstand:
Business quality evidence:
Valuation range and key assumptions:
Catalysts and expected evidence dates:
Base / upside / downside scenario:
Thesis invalidation:
Liquidity, dilution, leverage, and concentration risks:
Reason to buy, wait, reduce, or pass:

Use a source hierarchy

Begin with primary company and regulatory evidence, then use secondary research to challenge and contextualize it.

01
Read the latest annual and quarterly filings, footnotes, and risk factors.
02
Compare earnings releases with the cash-flow and balance-sheet changes.
03
Read management guidance and track whether prior guidance was achieved.
04
Use industry and competitor filings to test the company narrative.
05
Record each important claim with its source date and the next evidence checkpoint.

Next steps

Move from a researched thesis to a portfolio decision and monitoring plan.

Check portfolio fitSize from downside, correlation, liquidity, and monitoring capacity.Build a position tradeCombine the business thesis with technical structure and catalyst timing.Use server research toolsChoose commands by job and verify provider freshness.

Research the business before the ticker