In a previous article we described how to pick stocks based on a relative value approach within an industry. In this article we describe methods to screen for industries as opposed to the stocks within them. Many market practitioners stress the importance of industry analysis and maintain that however good the quality of a stock is, it is highly unlikely to outperform if the industry is performing poorly. Many of the ideas in this section have been taken from TV presenter and market practitioner, Jim Cramer.
What is Industry Stock Analysis?
Industry analysis is the analysis made in a specific sector or industry. This compares to stock analysis which is the research provided on a particular company and stock, or macroeconomic analysis which analyzes the fundamentals of a specific country. Industry analysis investigates the general fundamentals of the equities within the industry but more importantly investigates the state of external factors and how they should affect the......
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