The 25 questions you must ask before buying any stock

Buying a stock because the P/E ratio is low is like marrying someone because they have a nice haircut. It’s a good start, but you are missing some extremely important context.

Professional analysts don't just look at the numbers. They look at the business model, the industry tailwinds, and the management's credibility.

At Taufolio, we formalized this process into 25 Underwriting Checks—the exact scorecard our AI agents use when evaluating a company. If you want to invest like a pro, you need to answer these questions before you ever hit the "Buy" button.

Category 1: The Business & The Capital (10 Points)#

You cannot invest in a business if you don't understand how it physically makes money.

1. Development stage: Is the company a mature cash-cow, or a cash-burning startup?
2. Unique know-how and intangibles: Does the company hold patents or intellectual property that cannot be easily replicated?
3. Geographic diversification: Is the revenue split across multiple continents, or dependent on a single regulatory regime?
4. Product diversification: Does the company rely on a single hero product, or a suite of complementary offerings?
5. R&D spending: Is the company reinvesting heavily into its future, or coasting on past success?
6. Strong corporate brand: Does the brand itself command a premium price?
7. Pricing power: Can the company raise prices by 5% tomorrow without losing customers?
8. Forward-looking industry: Is the company operating in an industry with structural tailwinds (like cloud infrastructure) or a declining one?
9. Customer concentration: Does the company rely on three massive clients, or millions of retail users?
10. Capital structure: Can the balance sheet survive a sudden doubling of interest rates?

Category 2: The Product & The Moat (6 Points)#

A great company in a dying industry will still lose you money. The rising tide lifts all boats.

1. Mission critical product: Is the product a "painkiller" (essential) or a "vitamin" (nice to have)?
2. High switching costs: If a customer wants to leave for a competitor, will it cost them months of migration and retraining?
3. Network effects: Does the product become more valuable as more people use it?
4. Recurring revenue: Is the revenue predictable (subscriptions) or lumpy (one-off hardware sales)?
5. Scalability without massive capex: Can they double their customer base without needing to build a new billion-dollar factory?
6. Clear differentiator: Can you easily explain why a customer chooses this product over the direct competitor?

Category 3: The Environment & Management (9 Points)#

A spreadsheet cannot measure integrity. You have to read the earnings-call transcripts.

1. Fragmented competition: Is the market fragmented, or dominated by a massive monopoly?
2. Regulatory tailwinds: Are new laws helping or hurting this business?
3. Management answers directly: When asked about dropping margins, does the CEO answer directly or blame the "macroeconomic environment"?
4. Consistent strategy: Did management suddenly pivot to a new buzzword (like Web3 or AI) to chase a trend?
5. Clear capital allocation: Is management buying back stock when it's cheap, or doing expensive acquisitions at the top of the market?
6. Aligned incentives: Are executives getting massive cash bonuses while the stock price plummets?
7. Insider ownership: Do the founders and management own a significant chunk of the company?
8. Realistic guidance: Does management consistently over-promise and under-deliver?
9. Macro resilience: How did the company perform during the last recession?

Stop guessing. Start verifying.#

If you can't answer these questions, you aren't investing—you are gambling.

Doing this research manually takes hours of reading dry, 100-page primary sources. That’s why we built Taufolio. Our Full Company Report runs these checks for you in about 5 minutes.