Note: This is geared toward fundamental analysis. Something analogous could be done for technical analysis. 

This is the procedure we follow when we are considering the purchase or sale of a stock. While holding, we just monitor the news and investigate earnings reports and surprises, and make sure that the reason for buying is still valid. 

Since no one has the time to research the entire universe of stocks, it makes sense to use screening to narrow the field down to a few dozen that you will pay closer attention to. If you can research one or two stocks a week, you should be able to put together a good knowledge base (including a few worth buying) in a couple months. 

To maximize the value you get out of your research time, it's good to decide what you're looking for before you begin.What questions are you trying to answer, and what information will you need in order to answer those questions? Basically this means thinking about what your analysis will involve before you start your research.

What's a particular stock worth? Everyone has a different answer. Here's InvestorGuide's answer: A stock is worth the value of all its future dividends, discounted by the interest rate. This is why earnings are so important - the assumption is that earnings eventuallly become dividends. All the research and analysis is designed to help calculate this value. 

Although everyone does their research differently, here are a few things you might want to look into.

Annual reports:

• Income Statement
• Earnings growth (earnings acceleration is even better). Does the company have a record of exceeding analysts' expectations? Earnings are considered by many investors to be the most important single number, the assumption being that earnings pave the way for future dividends.
• Revenue growth.
• Stable or increasing margins.
• Stable or increasing R&D spending as a percentage of sales. (specifically for technology companies)
• Tax abnormalities. For example, taxes below 25% usually mean the company is using tax loss carry-forwards against income, which are only a temporary earnings booster.
• Number of common shares outstanding. Increases in the number of shares negatively impact earnings per share (issuance of new shares isn't necessarily bad; the important consideration is why they're doing it).
• Cash Flow Statement
• Cash flow. Ideally, cash flow would be positive, large, and increasing. In any case, understand why the company's cash flow is what it is.
• Balance Sheet
• Debt. The debt to equity ratio (long term debt divided by stockholder's equity) is the measure typically used. Lower is better, and zero is ideal.
• Cash (relative to annual sales). Cash is always a good thing, but it's especially important to companies that sometimes want or need to temporarily go cash flow negative. Remember that when new shares are issued, proceeds from the sale also appear here.
• Return on equity. This is a measure of net income relative to stockholder's equity. Higher is better.
• Receivables and inventory. They should not be rising much faster than sales are.
• Current ratio. This is the ratio of assets (cash, receivables and inventory) to liabilities. The higher the better.
• Management's Discussion and Analysis
• This is the section where the company helps you interpret what the numbers mean; for example, why revenues or margins changed. Pay special attention to the section in which they describe the outlook for the future; they typically discuss some of the potential threats and uncertainties they expect to encounter.

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