Basic Description Of The Company's Operation

The annual report will take some time before it arrives in the mail, so in the meantime you have to continue your research about the stock of the company in which you want to invest.

Big companies like Ford, Coca-Cola, and Chase Manhattan Bank have traditionally provided investors with lots of information about their operations. But as for the smaller and less widely known businesses, it used to be much harder to get an idea of the products or services they provide without spending lots of time in the library. Fortunately, the Internet has made gathering information about companies a lot easier.

You would think that what a company does is pretty obvious. But in some cases, it is hard to know exactly what a company does until you do more research. Take a company like the General Electric Company (GE), for example. Most people will tell you that GE makes appliances such as refrigerators, microwave ovens, and so on. Some may even be able to tell you that GE also operates television stations and that it owns the NBC television network. But did you know that the company also makes aircraft engines? Don't assume you know what a company does until you do your research.

Sometimes a company can be in so many different businesses that it is hard to pinpoint what it does. We tell Teenvestors to watch out for companies that go into various businesses that are not related in one way or another. For example, if Coca-Cola decided to go into the furniture business, this would be a sure sign that the company has lost its focus.

Websites where you can do your company research have write-ups called snapshots , or capsules (or other names that give you the idea that the descriptions are summaries about the activities of public companies). You can find snapshots in most good financial sites such as Yahoo Finance or CNBC. Keep in mind that a snapshot is just the starting point for finding out what a company does. There are lots of articles in the business publications and the newspapers we mentioned in Chapter 11 that can provide you with the information you need to make intelligent decisions about investing. Many of these publications are online and you can access them through our website.