vividly remember the first stock I ever bought. It was PeopleExpress, the pioneering no-frills airline. I got the idea from a very convincing article in Forbes magazine. Read the company's annual report. Got an analyst's research report on the stock from a roommate who worked on Wall Street. Even tried a couple of their flights and choked down some of the airline's infamous peanuts before I bought.

Yep, I did just about everything the conventional wisdom tells you to do before buying a stock. And I still lost all $400 I had invested when the company went bankrupt a year later.

I think the conventional wisdom bears part of the blame. The advice that I followed then on how to pick a first stock - not that much different from the consensus advice now - told me where to look for information, but it didn't tell me what to look for. What signals should warn me away from a stock? What kind of information would flash the green light? I was willing to do the work, but the advice didn't tell me what work to do.

I think I can do better. Buying your first stock boils down to a three-step process that I call "Show me the money," "Tell me a story" and "Find a friend." Let me pick a stock that I'd buy now - FDX, once known as Federal Express - to illustrate how the process works.

But first, some small print. Yes, I do know investing isn't quite this simple. What about checking to see that the stock complements your other assets, like the house that you own? What about factoring in how long you'll hold the shares? Or risk? Those are all important, but we're talking about buying a first stock, the initial step in a long process of learning and investing. Worry about the big picture later, when you've got more than a few dollars in the market and own shares in five companies. Right now I want you to get your feet wet in a way that will teach you something about how to pick a good stock.

In some ways, I understood PeopleExpress very well. It was an airline that, by eliminating frills such as meals and reservation systems, flew passengers for prices that radically undercut the competition. But I didn't understand PeopleExpress in the most important way. I didn't understand what had to happen so that the company could make a profit.

Now, let's use Investor to get a handle on FDX's business. Start by checking out its business profile under Company Facts. This describes what the company does and gives you a snapshot of its financials. (If you're a subscriber to Investor, you'll also be able to look at a more in-depth analysis through its Business Profile section.) These sections tell you that FDX is a leader in the global express-package-delivery business, providing services to 212 countries using a fleet of 600 aircraft and 39,000 trucks.

To go deeper, click on the SEC filings link and read the company's most recent annual report, called a 10-K. Look most closely at a section called Management Discussion for details on how the business operates.

Finally, analyze how the company does against its competitors. If you check out FDX for how it compares with its competitors on profit margins, management efficiency and investment returns, you'll see that FDX has started to grow faster than its competitors and is becoming more profitable.

If you then compare FDX's numbers to those of the average company in the Standard & Poor's 500, though, you'll also understand that this company runs with very low profit margins. As an investor, you'll want to keep a close eye on how well the company controls its expenses. On the upside, any sudden drop in the cost of, say, jet fuel, would give profits a big boost.

OK, why should this or any stock that you want to buy go up? Do you think the stock is cheap and will go up when other investors discover that it's underpriced? Or maybe you want to argue that profits are about to spurt - a kind of story called growth investing. Fair enough, but is either tale convincing?

A company's price ratio will give you an idea of how overvalued or undervalued a company's stock is compared with other stocks. For FDX, those numbers tell you that it is cheap in comparison to the market. The company trades at a price-to-earnings ratio of just 19 when the average stock sells for 28 times earnings.

Meanwhile, Wall Street expects earnings to grow at 29 percent in the fiscal year that ends in May 1998, and at 15 percent a year for the next five years.

Where's the growth going to come from? You can find out what FDX thinks by checking out the company's Web site. In its annual report, called Review of Operations, FDX says that the global express market will grow to $250 billion in revenue in the next 20 years from $35 billion in 1996. Much of that business will come from Asia. That's great for FDX, since the company is the only U.S.-based, all-cargo carrier approved to fly its own planes in and out of China and the only one with the authority to fly between Tokyo and any other point in Asia. FDX recently expanded the number of Chinese cities it serves to 85 from 60. Details like that make the growth story pretty convincing, I think.

There's no point in buying a stock that you can't get along with. Sooner or later the incompatibility will make you do something that you'll regret. For example, if your stomach ties itself in knots just thinking about the prospect of a stock you own dropping 10 percent or 20 percent in value, you probably shouldn't make a volatile Internet stock your first choice. Odds are you'll give in to the pain and sell it just when you ought to hold on through a short-term problem.

To see if you and a stock are a good match, check out a three-year historical chart. Is it full of peaks and troughs or relatively smooth? Two other numbers also help characterize a stock. Beta measures how volatile a stock is in relation to the market as a whole. A stock with a beta of 1 matches the market; a stock with a beta of 1.1 moves up and down about 10 percent faster than the market. A stock with a beta below 1 moves less rapidly than the market as a whole.

At the bottom of Company Facts, you'll find another useful number called Relative Strength (under the chart for Stock Price). This tells you how well this stock has appreciated relative to the market as a whole. The higher the number the better. A stock with a relative strength of 75, for example, has outperformed 75 percent of the market for the period.

Looking at this data on FDX, I see a relatively stable stock - beta is just 1.1. The chart shows a steady upward trend for the past three years. The stock's current relative strength of 61 - up from just 54 for the last six months - tells me that it has good current momentum. All in all, a pretty good psychological match for most beginning investors.

FDX may or may not be the stock for you. I use it here only as an example of some of the things to look for.

But of something else I feel sure: These three steps - "Show me the money," "Tell me a story," "Find a friend" - will help you buy your first stock and a good many after that. As you learn more about investing, you can build on this foundation, make it stronger, add extra stones and slather on extra cement. But you won't ever need to abandon it.