Stock Rating

Stock Rating - A stock rating is a rating given by a rating agency such as Standard & Poor, which evaluates the stock's future performance and the risk level associated with that stock. A stock rating is important for potential investors so that they can see what the experts, the analysts in the field consider to be a fair value rating of the given stock since they also do the evaluation the issuing company's performance as well. The evaluation of the fair value of stock is important because the higher the fair value is over the market value the more lucrative it would be to buy the stock. If the opposite situation presents itself and the market value is higher than the fair value, the analysts would recommend selling the stock at this time. Stocks are usually rated through a star system with 5 being the best rating. However, proceed with caution, find out what the criteria for rating is because different rating company's and different analysts will evaluate differently depending on how much emphasis they place on different market factors.