Reading the stock tables
When you flip open the stock section of the newspaper, it might look intimidating at first. The print is tiny and the pages are crammed with numbers!
Don’t be alarmed. It’s just a matter of understanding the columns. A key at the top of the first page usually provides some definitions.
Here are some of the common terms you’ll encounter:
- Ticker Symbol: If you were going to buy a stock, you would identify it by its ticker symbol, which is typically 2-5 letters in length and appears beside the company name in the tables.
- 52-week high/low: Tells you the highest and lowest price of the stock for the last 52 weeks. These figures could be helpful in your decision to buy or sell the stock.
- High/ Low Columns: These indicate the price range at which the stock has traded throughout the day. If you’re looking up stock information online during trading hours, the high and low prices you see will be for that day’s trading activity.
- Volume: This is the number of shares traded in the day’s trading session. A high volume means that a lot of people are trading the stock, while a low volume shows that there wasn’t much trading activity. It is worth comparing the daily volume traded to the average daily traded volume to get a sense of how much activity the stock has had on that day.
- Change: This tells you the difference between the day’s closing price and the previous day’s closing price. If the stock is “up for the day”, that means that there is a positive net change.
- Close: This is the last recorded trading price at the close of the market on that day.
- Dividend: This is the amount of money paid to shareholders usually quarterly for each share they own of that company’s earnings.
When screening stocks it is helpful to focus in on a select group of core companies whose business models you can understand. Distill the universe of stocks to a core group of securities you’d like to track. This can be narrowed down through a lot of methods.
Here a couple of examples of how to screen companies:
- Industry: Companies can be screened by their given business sector. Perhaps you may be interested in a handful of specific industries that you would like to invest in.
- Effective Management: Another screening method is return on equity (ROE) which shows how effectively the shareholder’s investment is managed.
- Dividend Yield: Companies can also be screened by dividends, a company that pay above a certain percentage that you set, of earnings back to their shareholders.
- Liquidity: Some investors prefer to invest in stocks that have a set trade volume per day so that if an issue arises and the stock needs to be sold, there will be a market for that stock.
- Market Capitalization: Some investors will have a focus on investing in specific companies that fit within a capitalization range. Think about whether or not you want to invest in small cap, mid cap, or large cap and how that may impact your strategy.
For more information on screening and factors to consider, take a look at this Globe and Mail Report
Tracking companies is all about taking a close look at how the stocks move over time alongside real events such as news of possible mergers, new products or layoffs. Only by doing this will you really begin to appreciate the trends and fluctuations that make the market so complicated – and get some insights about whether a given company is a good investment. Some resources that we would recommend include MarketWatch, Bloomberg, Google Finance, and using the IRESS platform for the Student Challenge.