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Why Nobody Can Agree on Which Stocks to Buy

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Have you ever Googled a stock and found one article saying buy — and another saying sell? Same stock. Same week.

There are two main schools of thought when it comes to choosing stocks. Financial people tend to fall into one of two camps.

Fundamental analysis is the first camp. These are the people who dig into a company’s finances — how much money it’s making, how much debt it’s carrying, whether it’s growing. They believe that if you understand the business well enough, you can figure out whether the stock is worth buying.

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Technical analysis is the second camp. These are the people who study price charts and trading patterns. They believe that the history of how a stock has moved can tell you something about where it’s headed next.

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Both camps are full of very smart, very experienced people.

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And they frequently disagree with each other.

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You can find a fundamental analyst and a technical analyst looking at the exact same stock on the exact same day and come away with completely opposite conclusions. One says buy. One says sell. Both have reasons. Both have data. Both are confident.

Nobody can predict exactly what a company will do, what the economy will do, or what the market will do next. Not the analysts on TV. Not the finance professors. Not the guy who made a lot of money last year and now has a newsletter. So if you’ve been feeling like there’s some secret formula you’re missing — some magic checklist the pros are using that you just haven’t found yet — you can let that go.

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There isn’t one.

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If the experts can’t agree — how were you ever supposed to just know the right answer? You weren’t. And that’s okay.

What there is, though, is a way to think about this that makes the decision a whole lot simpler.

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The First Rule of Picking a Stock: Understand What You’re Buying

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Before you look at a single number, there’s something that matters more.

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Do you actually believe in this company?

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Not a gut feeling. Not a hunch. Do you actually understand what this company does and why people keep giving it their money?

Not “someone told me it’s going up.” Not “it’s been in the news a lot.” Not “I heard it’s a good time to buy this sector.”

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Do you understand what this company does? Do you use their product or service? Do you think people will still need what they’re selling in five or ten years?

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Warren Buffett — one of the most successful investors in history, and one of the richest people on the planet — built his entire career on this idea. He only buys what he understands. If he can’t explain in plain language what a company does and why it makes money, he doesn’t touch it.

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That’s not a beginner shortcut. That’s actually the discipline.

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Think about the companies you already know. The apps on your phone. The stores you walk into without thinking. The brands you’d notice if they disappeared tomorrow. You already understand their business better than most people who own their stock.

Start there. Pick a company you genuinely believe in. Then do a little homework.

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How to Research a Stock in Canada:  Three Things to Check Before You Buy

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Once you’ve got a company in mind — one you understand, one you believe in — here’s what you’re actually trying to find out.

 

1. Is this company making money right now?

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This sounds obvious, but a lot of companies aren’t profitable yet. For someone buying their first stocks, a company that’s already making money is a simpler starting point.

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Think of it like a lemonade stand. Every cup you sell is your revenue — the total money coming in. But then you have to pay for the lemons, the cups, the advertising sign on the corner. What’s left after all of that is your net income. That’s the number that tells you if you’re making money.

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If a company’s net income is positive — they made money. Negative — they didn’t.

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2. Have those numbers been growing consistently?

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One good year doesn’t tell you much. What you want to see is a pattern.

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Think back to the lemonade stand. Did you sell more cups this year than last year? Did you find a cheaper lemon supplier so more money stayed in your pocket at the end of the day? That’s exactly what you’re looking for in a company — are sales going up, and is net income continuing to grow year after year after year?

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3. Do they have enough cash to keep going?

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Companies need money to grow. They hire people, build new products, grow into new areas. A company with money left over after paying its bills can do all of that on its own.

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Think back to the lemonade stand. You had a great summer — sold tons of lemonade. And now you’ve spent everything you earned buying supplies for next year. But next year it rains all summer and nobody’s buying lemonade. You have no cash cushion. No money left to fall back on. A company with no cash reserve is in the same spot. When things get tough, those are the businesses that struggle first.

Does this company have money to keep going, or is it running on empty?

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What you’re looking for is simple: revenue going up, net income going up, and enough cash left over to keep growing. If you see all three — that’s a healthy business.

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Some stocks also pay you just for owning them — that’s called a dividend.

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If you can answer those three questions and mostly like what you see — you’re already thinking like an investor. Most people never get this far before they hit Buy.

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Shopify vs GameStop: What Research Actually Gets You

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Still not sure the homework is worth it? Let’s make it real.

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Take Shopify. In 2015, it was a Canadian company solving a real problem for small businesses. Revenue was growing. People weren’t going to stop selling things online. Someone who noticed all of that and put $500 in early would have seen it grow to nearly $5,000 by late 2021 — almost ten times their money in six years.

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Now here’s the other side.

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Someone who heard about GameStop in January 2021 — when it was everywhere, in every group chat, all over Reddit and TikTok — and put $500 in near the peak would have watched it lose more than 80% of its value in less than a week. Not because they were foolish. Because the decision was driven by noise and excitement instead of any real understanding of the business.

Same $500. Very different outcomes.

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The research doesn’t guarantee anything — nothing does. But it gives you a reason to own something that holds up when the excitement fades. That’s the whole point of doing the homework.

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Where to Research Information in Canada

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Start with Yahoo Finance. It’s free, it’s clean, and it’s a lot less intimidating than it looks.  You don’t have to understand the whole page, for now, you’re only looking for 3 things.  

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Type in the company name. Every company on the stock market has a short code called a ticker symbol — think of it like a nickname. Shopify is SHOP. Royal Bank is RY. Air Canada is AC. Just type the company name into the search bar and it’ll come right up.

Here’s what to do when you get there:

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Click Analysis in the left sidebar. On the right hand side you’ll see a revenue versus earnings chart — click Annual at the top. The blue bars show you revenue. The other bars show you earnings. What you want to see is both sets of bars going up like a staircase, year over year. No math required. If the stairs are going up, the business is growing. If they’re going sideways or dropping, that’s worth paying attention to.

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Click Financials in the left sidebar. At the top you’ll see three tabs — Income Statement, Balance Sheet, and Cash Flow. Click Cash Flow. Scroll to the bottom and you’ll see free cash flow. Is it a positive number? Is it growing year over year? That tells you whether the company has money left over to keep going — or whether it’s running on empty.

You can also ask an AI like Claude, ChatGPT, or Gemini to get a plain language summary of the company before you dig into the numbers. Try something like:

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“Can you give me a plain language summary of [company name] — what they do, whether they’re profitable, and whether revenue has been growing?”

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Just remember — different AI tools will give you different answers. The same way two analysts can look at the same stock and disagree, two AI tools can see the same company differently. It’s a starting point, not a finish line.

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Your brokerage platform has all of this information too, once you’re comfortable. But Yahoo Finance is the easier place to start.

What if the bars are all over the place — up one year, down the next, no real pattern? That’s your answer too. It doesn’t mean the company is doomed. It just means this probably isn’t the right starting point for someone buying their first stocks. It’s hard to walk away from a company you genuinely like — but the homework exists exactly for moments like this. The numbers are telling you something. For your first few stocks especially, look for the staircase. There will be other companies.

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If you haven’t opened an investment account yet, see How to Open an Investment Account in Canada.

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Paper Trading in Canada: How to Practice Without Losing a Dollar

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There’s actually a way to do exactly that. It’s called paper trading — and it lets you buy and sell stocks using pretend money in real market conditions. Nothing is actually at stake, but you get to feel what it’s like to watch a stock drop 12% on a Tuesday and decide what you’d do about it.

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Two free options available to Canadians:

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Investopedia has a free stock simulator that gives you $100,000 in virtual cash to practice with. Webull Canada also offers free paper trading with real-time market data.

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Try it before you buy your first stock. It’s one of the best ways to build confidence without the risk.

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What About All Those Ratios and Charts?

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You’ve probably seen things like P/E ratios, moving averages, RSI, MACD — a whole alphabet soup of tools that analysts use.

Do you need to understand them?

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For a beginner choosing their first few stocks? No.

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Those tools are helpful for experienced investors making very specific decisions about very specific timing. They add a layer of nuance on top of an already-solid foundation.

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But if you don’t have the foundation yet — if you don’t know whether the company is profitable or growing — the ratios won’t save you. They’re the barbecue sauce. Not the steak.

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Start with the three questions. Once you’re comfortable with that process, you can layer in more tools if you want to. But you don’t need them to get started.

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The Most Common Stock Picking Mistakes Canadians Make

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Most early investing mistakes aren’t about picking the wrong stock. They’re about how the decision gets made.

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Buying because of hype. You’ve seen it. A stock blows up on TikTok. It’s in every group chat. Your coworker who never talks about money suddenly won’t stop talking about this one company. Excitement is not a research strategy.

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Selling the moment it drops. Stock prices move every single day. When yours drops, it feels urgent — like you should do something. But a drop doesn’t mean you made a mistake. It might just mean the market had a rough week, or interest rates changed, or investors got nervous about something completely unrelated to your company. If the business is still solid, a temporary dip is usually not a reason to sell.

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Waiting for the perfect moment. Nobody knows when the right time to buy is. Not even the professionals. A reasonable stock, bought at a reasonable price, held for a reasonable amount of time, has a much better track record than waiting for the stars to align.

Forgetting about your TFSA. If you’re buying stocks in Canada, they should almost always live inside your TFSA first. Any gains — whether from the stock going up or from dividends — are completely tax-free inside a TFSA. That’s not a small thing. See What Is a TFSA in Canada? if you haven’t set one up yet.

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The Gut Check Before You Hit Buy

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You’ve found a company you believe in. You’ve looked at the three questions and the answers look reasonable. Now what?

Before you place the order, sit with these for a minute.

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Would you be okay if this dropped for a while? Stock prices go up and down — sometimes for reasons that have nothing to do with the company at all. A bad week in the economy. A change in interest rates. Investors getting nervous about something unrelated. If this stock dropped 20% next month and the company itself was still doing well, would you hold it? Or would you panic and sell?

Is this money you can leave alone? If you’re saving for something in the next year or two — a car, a trip, first and last on an apartment — that money probably shouldn’t be in a single stock right now. Stocks need time to recover if they drop. Give them that time.

Are you putting too much into one company? Think about it this way. If you walked into a clothing store with $500, would you spend it all on one shirt? Or would you use that $500 to put together a whole outfit — a few pieces that work together?

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Same idea here. If you’ve got $500 to invest, do you want to put it all into one company? Or does it make more sense to put $200 in now, do a little more research, and find another stock or two to put the rest into?

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Worth knowing: some Canadian brokerages let you buy a fraction of a share. You invest a dollar amount and get whatever fraction that buys you. So if a stock costs $1,500 per share and you put in $100, you own roughly one-fifteenth of that share. It’s dollar-based — not fixed slices like halves or quarters. Not all brokerages offer this, so it’s worth checking with yours.

Start small. Test it. See how it feels. You can always add more later.

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And if you’ve done the homework on two companies and both look good? Start with the one you understand better. Or put a smaller amount into each and see how it feels. You don’t have to choose perfectly — you just have to choose thoughtfully.

If you can sit with all of those honestly and still feel good about the purchase — you’re ready.

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Why Every Serious Investor Has a Checklist – How to Stay Out of Trouble

 

You’ve done the work. You found a company you believe in. You went through the three questions. And then you saw it — revenue dropping, cash running low, something that doesn’t add up. But you really, really want this stock.

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Stop.

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This is real money. Money you worked for. Money you’re trying to do something with. And the only thing standing between you and a decision you might regret is your checklist.

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Whatever your checklist looks like — this one, a version of this one, something you build yourself — FOLLOW IT. If a stock doesn’t pass your own rules, don’t buy it.

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Build your checklist. Follow it. Every time. Not most of the time. Every time.

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Will you sometimes miss a stock that goes on to do well? Yes. That will happen. But every serious investor has a version of this same rule. The ones who don’t aren’t investing — they’re just hoping.

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The checklist keeps your emotions out of the driver’s seat. That’s not a suggestion. That’s the whole game.

Stick to the list. There will be other stocks.

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You Don’t Have to Get It Perfect

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Every investor — including the experienced ones — has bought a stock they later wished they hadn’t. That’s not failure. That’s just part of learning how this works.

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The goal was never to find the perfect stock. The goal is to make a thoughtful decision with the information you have, give it time, and keep learning as you go.

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And if you’d rather skip the stock-picking process entirely and invest in a basket of companies all at once, that’s exactly what ETFs are designed for. A lot of investors do both — ETFs as the foundation, a few individual stocks they really believe in on top. See What Is an ETF in Canada? to understand how they work.

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Either way — you started. You learned something. That matters more than you think.

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Now go look up that company you’ve been thinking about. You’ve got three questions. You know what you’re looking for.

 

Bottom Line

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Choosing a stock doesn’t require a finance degree. It requires believing in the company and doing a little homework.

Start with something you understand. Ask whether it’s making money, whether that’s been consistent, whether it’s growing, and whether it has enough cash to keep going. Go to Yahoo Finance and look it up. Run through the gut check. And make sure your stocks are living inside your TFSA so your gains stay tax-free.

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Nobody can predict exactly what any stock will do. Not you, not the analysts, not the people on financial TV who sound very confident. What you can do is make a thoughtful decision — and then give it time.

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That’s really all investing is.

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Get Started Today

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• Write down two or three companies you already use and genuinely understand

• For each one, ask: Is it making money? Has that been consistent? Is it growing? Does it have cash to keep going?

• Go to Yahoo Finance and look them up

• Try a practice run on Investopedia or Webull’s free paper trading simulator before you go live

• Run through the gut check — would you be okay holding this if it dropped for a while?

• Make sure your investment account is set up and your stocks will live inside your TFSA — see How to Open an Investment Account in Canada

 

Frequently Asked Questions

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Q: Should I reinvest my dividends or take the cash in Canada?

 

A: For most beginners, reinvesting is the better move. When a company pays you a dividend, putting it straight back into more shares means your money keeps compounding without you having to do anything. Most platforms let you set this up automatically. The only time taking the cash makes sense is if you need the income — otherwise, leaving it invested is how small payouts turn into something significant over time.

 

Our article What Are Dividends? covers how dividends work and what your options are.

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Q: Should I buy more of a stock I already own in Canada?

 

A: If you still believe in the company and it still passes your three questions — it's making money, it's growing, it has cash to keep going — buying more at a lower price can actually work in your favor. But don't buy more just because the price dropped. Make sure the reason you bought it in the first place still holds. If it does, adding more is a reasonable move. If you're second-guessing the business itself, that's a different conversation.

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Q: Should I use a TFSA before buying individual stocks in Canada?

 

A: Yes — almost always. Any gains you make on a stock held inside a TFSA are completely tax-free. Outside a TFSA, you pay capital gains tax when you sell at a profit. For most Canadians just starting out, there’s no reason to buy stocks outside a TFSA until you’ve maxed your contribution room. Make sure your stocks are living in the right place before you worry about which ones to buy.

 

Our article What Is a TFSA in Canada? covers contribution room and how to get set up.

 

This article is for general informational purposes only and does not constitute financial or investment advice. Always do your own research before making any investment decisions. Capital Corner may earn a commission if you apply for a product through a link on this page — at no extra cost to you.

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