^ You've sorta got it.
Step 1 - Find a stock to research. You can get stock tips from people you trust, by doing screens to find stocks with certain characteristics (high rate of return, low P/E, no debt, whatever).
Step 2 - Do your research. This usually involves having a gander at any analysts reports (to get facts, not opinions), perhaps perusing Value Line (Buffett-accredited source, expensive but awesome, if you're in uni or college, they may have a subscription you can get your hands on), checking the SEC (or comparable) for whatever they've got, including annual reports, 10-Ks, quarter reports, and so on.
Step 3 - Value the company's stock. Develop an idea of what the stock/company is worth. Basically, see if there's a good margin of safety between your idea of intrinsic value and what the cost of the shares is. There's a couple of ways to do that, including dividend discount model, Discounted cash flow analysis, relative valuation (which is what you're talking about in step 4), and many others. I'd suggest reading... (I'll get the name to you later). The name escapes me at the moment, but it's a good book with a good overview of investing and includes a good start on the nuts and bolts of valuation. Valuation is really what's the core of value investing. Buffett's genius is largely in valuing franchises.
Step 5 - buy?
I may make a little mind map of value investing as well. This assumes you're into value investing, of course. I'll add more later.
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