164 The Sector Strategist earnings potential of a given company. To determine this, you will depend on a financial analyst's toolkit, which includes the corporation's annual report, 10K and 10Q, independent analysts' research reports, and macro-economic data. With this informa- tion in hand, your goal is to thoroughly examine a company and ultimately answer the three questions. This is not an easy pro- cess. While it is not critical for the average investor to fully un- derstand every aspect of financial statement analysis, it is necessary to have a broad understanding of what appears within a company's financial statements. Investors who can perform good fundamental analysis and spot pricing discrepancies will be able to build a portfolio of superlative stocks. Before we begin evaluating the different approaches to com- mon stock evaluation, a quick review of a firm's primary finan- cial statements is needed. There are two major financial statements that an investor must review before undertaking the task of stock evaluation.