Fundamental Analysis of Stocks is one of the most popular methods of studying stocks.
Investors that analyze stocks utilizing fundamental analysis prefer to look at basic information about a company in an effort to figure out what they think is the true, or "fair," value of a Company's stock. Fundamental Analysts look at a lot of news and perform research into data such as the growth of the Company's sales and profits. By comparing the current stock price to the stock's fair value, they believe they can determine if it might be a good time to buy that stock or if it's a stock that they should avoid.
Some of the best-known investors in history have been fundamental analysts, including Peter Lynch, the legendary manager of the Fidelity Magellan mutual fund. Under his management, Magellan was the best performing mutual fund in history. Another famous fundamentalist is Warren Buffet, the brilliant investor behind Berkshire Hathaway. Berkshire Hathaway was once a textile company, but Buffet turned it into a vehicle in which he could invest in other stocks, with phenomenal success. A single share of Berkshire Hathaway now trades for over $60,000!
Most individual investors use fundamental analysis in some way to pick stocks for their portfolios. If you're looking for a way to build a "buy-and-hold" portfolio of stocks, made up of companies that you can purchase and then own for years without losing too much sleep at night, you'll probably be interested in the methods of fundamental analysis.