Good Stock or Just Hype? Pt. 1: Start With the Fundamentals
When it comes to stocks, we’ve talked plenty about looking under the hood before buying anything just because it’s trending. Something can be all hype today and fall flat on its face tomorrow. That’s just how the game works sometimes: Quick Buzz, Quick Bust.
But as I always remind folks: The key to building a solid investment portfolio isn’t luck, vibes, or whatever that finance bro on your timeline is yelling about. It’s due diligence. Know what you’re investing in, and why you’re investing in it.
The stock market is not a get-rich-quick scheme. No matter what the movies show or what your favorite social media “gurus” try to sell you. But when approached with patience, consistency, and actual understanding, it can become a profitable engine over time.
Think of your portfolio like a garden:
You plant your seeds. You water and care for them. You stay consistent. Even when it looks like nothing is happening. In due time, those seeds turn into fruit. Give it enough time, and your kids (and their kids) might be eating from the same tree.
With that spirit in mind, let’s break down Part 1 of the series:
4 Signs You’re Looking at a Strong Stock
These are some of the fundamental metrics that help you separate a quality company from a quick trend. If you understand these, you’re already ahead of most new investors.
1. Revenue Growth (Year Over Year)
This one is simple: is the company bringing in more money than the year before?
Revenue is the top-line number. The total income a company generates from its products or services before anything is taken out. When revenue grows consistently, especially at 10% or more year over year, it shows:
The business is attracting more customers
Demand for what they offer is rising
The company is expanding its market or improving its pricing power
They’re not just surviving — they’re scaling
If a company’s revenue is moving backwards or staying flat, that’s a yellow flag. Because if your paycheck stayed the same for five years, you’d start asking some questions too.
2. Earnings Per Share (EPS) Growth
If revenue shows how much money is coming in, EPS shows how much of that money actually translates into profit for you, the shareholder.
EPS is the company’s total profit divided by the number of outstanding shares. What you want to see is:
EPS positive: The company is actually making money.
EPS growing consistently: They’re not just making money, they’re getting better at it over time
Growing EPS often signals:
Strong leadership
Better cost management
A business that can stay profitable even when times get tough
A company that’s not just hype. It’s efficient.
Think of EPS like your own take-home pay after taxes. The higher and more consistent it is, the more stable you feel.
3. Debt-to-Equity Ratio (D/E Ratio)
Every business has some debt. That’s normal. Debt becomes a problem when a company relies on it too heavily just to stay afloat.
The debt-to-equity ratio measures how much a company is borrowing compared to how much value (equity) it already has.
As a general rule:
Under 1.0 = company is carrying manageable debt
1.5–2.0 and up = they might be over-leveraged
A lower ratio shows:
The company isn’t drowning in loans
They can weather economic downturns
They’re using debt wisely, not desperately
Cash flow is strong enough to operate without constantly running to the bank
Imagine someone who makes $60K a year but has $90K in credit card debt. That math ain’t mathing. Same applies here.
4. Free Cash Flow (FCF)
Free cash flow is one of the most slept-on metrics. But it’s also one of the most important.
This is the cash the company has left after it pays all of its bills, expenses, and investments.
In other words: “What’s left when everything necessary is already covered?”
You want to see:
Positive free cash flow
Free cash flow that’s rising year after year
Why it matters:
Companies with high FCF can fund their own growth
They can pay dividends
They can survive downturns
They don’t need to take on risky debt to move forward
They have options — and options = strength
FCF is basically the business version of having money left after bills and still being able to stack savings. That’s when you know you’re doing something right.
Closing Thoughts
Hype might get a stock trending, but fundamentals keep your portfolio healthy. If a company checks multiple boxes above, that doesn’t guarantee success, but it puts you in a much stronger position than the average investor who’s just rolling dice.
In Part 2, we’ll take it a level deeper and get into the valuation side of the game — things like the P/E ratio, PEG ratio, P/S ratio, and even dividend yield and payout ratio. These are the numbers that help you figure out whether a stock is priced right or if you’re about to overpay for a pretty face with no substance.
Stay locked in. Stay consistent. And remember: Wealth is built, not guessed.
