How do I analyze a stock before buying it?
Short answer
Work through five questions: do you understand how the business makes money, does it have a lasting advantage (high returns on capital), have earnings held up through downturns, does management allocate capital well, and does the price leave a margin of safety? invest-like runs this checklist on any of 21,000+ stocks for free and shows the numbers behind each answer.
What matters
Most losses come from skipping one of these questions, usually price or durability. A fixed checklist keeps you honest.
Compare each number with the company's own sector: a 12% margin is excellent for a grocer and weak for a software company.
The checklist
- 1Business: explain in two sentences how it makes money.
- 2Moat: return on invested capital above 15% for years, and stable margins.
- 3Durability: profitable through the last downturn, manageable debt.
- 4Management: sensible buybacks and acquisitions, no constant share dilution.
- 5Price: owner-earnings yield compared with bond yields, P/E compared with history and sector.
Questions
Can AI analyze a stock for me?
It can do the legwork. invest-like applies the checklist to current financial statements, compares every metric with the sector and writes out the result; you still make the decision.
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Reviewed 2026-09-27. Educational only, not investment advice.