🔎 Reading the Numbers · Lesson 8 of 8 · 8 min
The 5-Minute Stock Checkup
🔧 Most people 'research' a stock by staring at the ticker and vibing. Six yes/no questions — about five minutes — can flag a hype-stock trap before you ever tap 'buy.' Steal the checklist.
💡 Key idea
Run the 6-question checkup: growing, profitable, low-debt, cash-generating, fairly priced, and moated.
🧠 Why it matters
Fundamental analysis isn't about memorizing numbers — it's a quick six-question checklist before buying any stock: (1) GROWING? — is revenue rising over several years? (2) PROFITABLE? — positive, ideally growing, net income? (3) NOT DROWNING? — is the debt load manageable? (4) CASH-GENERATING? — is free cash flow positive (real money, not paper profit)? (5) FAIRLY PRICED? — is the P/E reasonable versus peers and growth, not hype? (6) DEFENDED? — does it have a moat? You don't need every box perfect, but growing, profitable, low-debt, cash-rich, fairly priced, and moaty = a strong business. Several red boxes = walk away.
🌍 In the real world
🧮 An investor eyes a buzzy stock. Quick checkup: revenue growing ✅, but net income negative ❌, debt enormous ❌, free cash flow negative ❌, P/E sky-high on hype ❌. Five of six boxes are red — the checklist said 'pass' in 90 seconds, long before the stock later cratered.
📌 Takeaways
- Analysis = a checklist of the right questions, not memorizing numbers
- Six boxes: growth, profit, debt, cash flow, price, moat
- Several red flags = walk away, no matter the hype
✅ Test yourself
What's the smart way to use fundamental analysis?
- Memorize every line of the filings
- Run a checklist of the right questions (growth, profit, debt, cash, price, moat)
- Only look at the chart
- Follow influencer picks
Answer: B · Run a checklist of the right questions (growth, profit, debt, cash, price, moat)
It's about asking the right questions quickly, not memorizing every number.
A stock is growing but has negative net income, huge debt, and negative free cash flow. You should...
- Buy immediately — it's growing!
- Be very cautious — multiple red flags outweigh the growth
- Ignore the debt
- Trust the hype
Answer: B · Be very cautious — multiple red flags outweigh the growth
Several red boxes (profit, debt, cash) outweigh a single green one — that's a fragile business.
Which set is the fundamental 'checkup'?
- Logo, CEO, hype, volume
- Growth, profitability, debt, cash flow, price, moat
- RSI, MACD, support, resistance
- Likes, follows, shares
Answer: B · Growth, profitability, debt, cash flow, price, moat
Those six business questions summarize a fundamental health check.
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