When you’re considering an investment, it’s important to research how the company makes money, and what kinds of risks it may face. Whether you’re looking at a single stock or an entire portfolio, this process is called “due diligence.” It’s the key to finding the best investment opportunities.

This article is about the basics of due diligence: How to research investments the right materials from a company, looking at key numbers and asking questions (quantitative research), and comparing a company to its peers and industry trends (qualitative research).

It’s also a good idea to check for a few red flags. For example, if you see a headline that sounds too good to be true, it’s a sign of possible fraud. Also, a company that doesn’t disclose its financial information with the SEC could be a red flag for a scam.

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Some people find the amount of data available overwhelming, but there are tools that can help. For example, many online brokers offer research tools on their platforms, and some are free to use. Other tools that can be helpful include a watchlist or customized dashboards that centralize alerts and information in one place, and sentiment analysis that helps you understand how the market feels about an idea, product, or news item.