What is fundamental analysis?

Fundamental methods analyze the health of individual companies by examining sales & earnings growth, cash flow, profit margin, level of outstanding debt, return on equity, among other metrics.  In general, fundamental analysis tells us how healthy a company is.  However, it’s difficult to make entry and exit decisions using fundamental analysis.  Just because a company is healthy doesn’t necessarily mean that the stock will increase in value, at least for the short to intermediate-term.  Typically, technical analysis is used to determine when to enter and exit a stock.