It can be difficult to assess both the pros and cons of a potential investment, but SWOT analysis is a powerful framework that can be used at the very start of that analysis. SWOT stands for strengths, weaknesses, opportunities, threats, and it's a simple way to broadly understand a new business. In the following video, health care analyst Max Macaluso illustrates SWOT analysis using Dow component Merck (NYSE:MRK) as an example.

Max Macaluso, Ph.D. has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.