Got the investing bug? Thinking about throwing cash down on some shares of Company XYZ, but not sure where to start? Before you quit your job to become a day trader, here’s what you should know.

This is for you: If you’re interested in investing in a particular stock.

Hands-on time: A few hours, depending on how much in-depth research you want to do. If you’re planning on poring over a company’s financial reports, it’ll take more time than if you’re just going to do a cursory online search and jump in.

Total time: Same

Cost: $0 to research a stock

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The basics: When you buy a stock, you’re basically acquiring a little chunk of a company, and usually you’re betting that the share price will rise after you buy it. Before you take the plunge, you should know a few things about the business, how it’s doing, and where it’s headed.

What you’ll need:
An Internet-connected computer

What to do:
1. Familiarize yourself with the company by visiting its website, if it has one. If you don’t know much about the business, what it does or what it makes, you’re investing in an unknown. (Not generally a great idea.)

2. Snoop around on financial sites that provide data on a company and its stock. Those sites usually list recent news as well as a company profile and key statistics. For instance, you can find information about Best Buy’s stock:

• Here on the Wall Street Journal’s site
• Here on Yahoo Finance
• Here on Morningstar.com
• Here on MSN Money

3. Check out the company’s price/earnings ratio, otherwise known as the P/E ratio. That’s the number you get when you divide the share price by the company’s earnings per share. So if a stock’s price is, say, $35, and its annual net income works out to $5 a share, the P/E ratio would be 7. (And you probably don’t have to do this math yourself. Most stock evaluation websites list this number somewhere.) Great. Sure. But what does it mean? Experts generally compare a company’s P/E ratio to that of a major stock index, like the S&P 500. (You can find the S&P 500’s P/E ratio here.) If your stock’s P/E ratio is lower, it may be a deal. If it’s higher, it may be overpriced.

4. You might also check out the stock’s dividend yield, which is the stock price compared to the dividend. This is also something that’s easily findable on a financial site, and you can compare it to the dividend yield of a major stock index. A higher yield means that you’re getting more cash for your investment (per share) than the average in the market. (Of course, if the company doesn’t pay a dividend, there will be no dividend yield, and that’s not necessarily a bad thing. It all depends on what you’re looking for.)

5. Grab a copy of the company’s public documents, such as earnings reports and financial statements. Usually you can find those on the company’s website, in an “Investors” section. (For instance, here is the investor section on Best Buy’s site.)

6. You can also find more in-depth quarterly and annual reports (called 10Qs and 10Ks), which companies file with the Securities and Exchange Commission. (Again, here’s a filing from Best Buy.) Some companies list the report on their websites, but you may have to go directly to the SEC’s site and search for it. (Click on “Search for Company Filings.”) This is seriously snoozy reading, but you’ll have a great idea of what’s going on with a company after you’ve slogged through it.

7. You may also want to take a look at some of the company’s competitors. How do your company’s numbers compare to others in the same field? Don’t know who the competitors are? Check with Hoovers.com, which usually lists the top three.

8. After taking a look at all of the data you’ve gathered and reading through major company documents, you should have a pretty good feel for how the company’s doing and where it’s headed in the future. You have all the info you need to decide whether or not you’d like to invest—the rest is up to you.

To learn more:
Stocks...Finally Demystified (LearnVest)
How Much Money Should You Invest? (MSN Money)

Did you do it? Tell us what worked or share other tips in the comments below.

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