A stock is a share of ownership in a company. When you buy shares in a public company, you get a small piece of everything the company owns and earns (minus any taxes you may owe on your investment). Stocks are sold and bought through stock market exchanges, where brokers act as middlemen for individual investors. Most investors own what’s called common stock, though some own other kinds of stocks that work a bit differently. Ownership of a stock doesn’t necessarily mean that you carry a lot of weight within the company, or that you get to rub elbows with company bigwigs, but it does come with voting rights and the potential to pay dividends.

Ultimately, stock prices are driven by supply and demand. If a stock has strong demand, its price will increase; if the company’s future growth prospects look dubious, the stock’s price will decline. A stock’s performance can also be compared to that of its industry, or to the overall market. The more information you have available, the better able you’ll be to decide whether or not a stock is worth the money you’re investing in it.

One way to evaluate a stock is to look at its valuation results, which are calculated using various ratios like the Price to Earnings (P/E) Ratio. This ratio is a way to see whether the stock is overvalued or undervalued, and is calculated by dividing the market price of a share by the company’s earnings per share. The lower the P/E ratio, the less a stock is overvalued; however, this doesn’t necessarily mean that the stock will go up in value, as there are other factors that could influence the price of a stock, such as the company’s projected future earnings or its business model.

Another important factor to consider is how much a stock pays in dividends, which are payments made to shareholders out of the company’s profits. Some companies pay dividends on a regular basis, while others only pay them in certain circumstances, such as after an acquisition or when the company has excess cash. Dividends can help offset the effects of inflation on your returns, and may even be a significant part of your total return.

You can also use data resources like FINRA’s Market Data Center to get valuable information on individual stocks. This includes data on key stock valuation metrics, as well as trading data and news. In addition, some brokerage firms, often full-service firms, offer research from their own analysts and from outside sources. Lastly, you can also seek out professional stock research reports, which compile Wall Street analysis from different sources for in-depth insight.