Imagine the Internal Revenue Service saying, “Don’t listen to our instructions when filling out your tax forms.” That’s akin to what stock analyst Stephen McClellan is saying about his fellow analysts. Don’t rely on analysts to make money in the market, he says in his new book, Full of Bull: Do What Wall Street Does, Not What It Says, to Make Money in the Market. (FT Press, $22.99).

After 18 years as an analyst on Wall Street, McClellan has written a “tell-all” book revealing how analysts and corporate executives are not the best sources for information about a company’s health.

“As in investor you should always be skeptical,” he says. “Certain actions of mutual funds, investment managers, insurance companies, banks, pension funds and hedge funds are detrimental to the individual investor.”

Too often, investors are misled by corporate spin and analyst views, when instead they should tune out the noise and focus on finding their own stocks that can provide yields for the long term. His questions that stock buyers need to answer by doing their own research include:

•Is the company in a new or niche market? If it is, its growth can be higher by being in the first stage of growth and not having much competition.

•Is the company’s product or service specialized and simple? If you can’t understand what it does or sell, move on.

•Is its revenue growth consistent?

•Is its profit margin at the high end of its peers?

•Does it have low debt? If debt is less than 20 percent of its assets, it has a better chance of avoiding financial problems and has the cash for growth.

•Does it have strong management? Look for managers with a long tenure and record of success.

•Is its annual revenue in the $1-billion to $2-billion range? McClellan says that a company in this range is small enough to still have growth ahead and at the same time making enough money to support itself now.

•Is it in a rising industry? Obviously, investing in a declining industry is something to avoid.

•Does it have a low price-to-earnings ratio? A common belief is that company stock with a high PE can be overpriced. Under 20 is a good rule of thumb.

•Does it pay a dividend? McClellan prefers dividend-paying stock as a sign of an established company and one that is stable.

•Is the stock listed on the New York Stock Exchange? While not a necessity if it meets most of the above criteria, a stock listed on the NYSE is a sign of a more stable company.

•Are the executives overpaid? Some of the worst companies have overcompensated executives, which can indicate arrogance. Also watch for backdating of stock options and lucrative severance packages.

McClellan makes it clear his book is not for mutual-fund investors, but those who want to pick their own portfolio of individual stocks. And by avoiding what Wall Street says, investors can find success by doing their own research.

“The Street is oriented toward trading, not investing, and caters to major institutional clients,” he said. “The pressure is extreme to give privileged insight and treatment to these institutions while [overlooking] the small individual investor.”

Dan Serra is a personal finance writer based in Colorado Springs, Colo. and can be e-mailed at serrafinance@yahoo.com