How exactly do you go about finding stocks to buy?
What's your process???
Answers
3966 points
EthanR answered one year ago …
Sometimes I find a stock by reading financial web sites or by hearing something on CNBC. I like a good story stock. Other times, I discover a retailer or restaurant stock just by seeing it in a mall or eating there. Sometimes I get stock ideas from the other writers at TheTycoonReport.com or from other readers here at Tickerhound! But I always use fundamental analysis to determine IF to buy a stock, and technical analysis to determine WHEN to buy the stock.
For example, someone wrote a question about Chipotle the other day. When I did the research I found that their PE ratio is still kind of high, and technically the stock didn't look very good. However, I recognize that it is a good company, and that eventually at a lower price, for me it will become a better stock to buy. For it is not as important what stock you buy sometimes as it is WHEN you buy it.
116 points
eliseom answered one year ago …
Check one stock in IBD, usually in newsletter or CNBC. Continue only if A or B for Fundamental Rating, an EPS greater than 80 and a Price Strength scoring 60 or less (that's in lieu of Graham's safetry margin) and 20% off its 52 week high. More attractive if scores an A or B in Sales Rating (includes ROE).
If the Accumulation/Distribution score is too low I check the News and if no good reason for lack of institutional interest I go on w. comparative search. This includes Research Wizard in MSN money where I can compare company vs sector for D/E, profit margins and Rev. and Earn Growth. Turn to Yahoo Finance to discard if negative Free Cash Flow or Current Ratio below 1.0. 'Disregard technicals because this system is only suited for long run. But don't disregard the News. Finally repeat w. peers in IBD's Checkup List (5 stocks).
3678 points
MNSL answered one year ago …
Today I read the article “3 step stock picking” written by Wayne Mulligan.
I think we can get best answer for the above question from this article.
To read this article you should go to Tckerhound Weekly dated 28th June 2008.
Value investing is still a major investment strategy.
Evidence suggests that the value portfolio consistently outperforms the growth portfolio throughout the business cycle.
The underlying principle of value investing is to invest in companies trading below their true value.
We find that value investing works in both contraction and expansion market.
In short intelligent investors prefer companies with following characteristics.
Higher return of equity
Margin of safety
Undervalued
Less debt or no debt
Higher earnings and demand for their products and services
Today these undervalued companies are doing well through out the world. In fact investors who invested in undervalued stocks exposure to China and other emerging markets reaping benefits now. They did not invest in overpriced stocks in China and instead they invested in undervalued stocks traded in other countries. Once Chinese stocks become value stocks then these intelligent investors will invest there.
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