To illustrate the methods used by research specialists, let us consider the approach used by the analyst for an investment company that has traditionally invested substantially in the public utility business. Electric utility companies constitute the most important group among public utilities. The analyst also stresses these factors:


1. The economic characteristics of the area served by the company. What are the sources of the company’s energy? 3. The company’s capital structure (the percentage of total investment represented by bonds, preferred stock, common stock, and surplus). The analyst now visits the company itself and talks with top executives and their associates. Company officials often arrange to visit the office of the investment company to bring the analyst and officers up to date. Discussion with the utility company heads generally revolves around questions raised by the analyst. Deciphering a company’s research methods certainly requires some legwork on the part of the investor, but it is vital to know how seriously a company takes its research before investing in said company.

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