If you wish to arrive at your own reliable conclusion about a stock, it's worth looking at what professional stock market analysts do. Here are some of the steps involved in stock market analysis. Some analysts follow what is called a top-down strategy to analyse stocks. This means that they pick an industry to start with, and then look for a winning company within that industry. This gives them an idea of which company’s stock is beating their peers. This strategy involves a fair degree of fundamental analysis. On the flip side, you also have analysts who follow a bottom-up strategy.

In this strategy, investors start with a particular company and then learn what the outlook of the sector that the company is part of looks like. There is a fair degree of industry analysis using annual reports made available by companies. Professional stock market analysts also look for the company’s strengths and weaknesses, and its financial strength using its income statement, balance sheet, and cash flow statement. Other fundamental aspects like management and growth analysis are also conducted. By estimating the earnings per share with the estimated P/E ratio, the final step is for an analyst to set the stock’s target price.