Finding the Right Stocks: Because Throwing Darts at a Board Isn’t a Strategy

Investing in the stock market can be a daunting task, especially with approximately 4,000 companies actively traded on the NYSE and NASDAQ. The key to successful investing is finding the right stock at the right time. Here’s a comprehensive guide to help you navigate this process.

Why Deep Research Matters

When you start deep research based on numbers and fundamentals, you will find that most sites charge for this data. Why? Because this data matters! These sites provide vital information that can help you make sound investment decisions. It’s up to you to make sense of it and use that data effectively.

How to Find These Stocks

Word of Mouth

You may find a good company through a friend or colleague’s recommendation, websites, blogs, news, TV, or something you came across and thought would be a good buy. While it’s okay to consider these companies as viable options, remember that someone’s recommendation is just the starting point. You should never buy a stock based solely on someone’s suggestion without doing your own research.

Stock Screeners

Stock screeners can help you narrow your search based on specific criteria. The best screeners are not necessarily the ones with all the bells and whistles but those that provide the information you need. Start by looking into the broker you signed up with and check under the “research” tab. If not, you can use the following links to some of the stock screeners:

• Finviz
• Zacks
• Yahoo Finance

Here are some default numbers to start with on your screener to highlight good companies and weed out bad performers. You can modify these as you start to make sense of the numbers:

• Market cap greater than 100M
• P/E ratio 5-15
• Price to book 0.5-1.5
• Total debt/equity for the last quarter 0-1
• Current ratio > 1.5
• Return on Equity (5-year average) > 5%
• Return on Equity (last quarter) > 5%
• Growth Rate > 10%

Remember, this is just a pool of stocks to start further research. You are not going to buy stocks just because they appear on this list.

Investing Blogs & Websites

There are thousands of investment links on websites, blogs, apps, etc., that you can’t help clicking on. While some of these sites are selling a product, others may provide legitimate information that raises your awareness about a company, product, or market. Add these to your radar for further research. Respectable newspapers like the “Wall St. Journal” or “Investor Business Daily” often have more substance.

Here are some useful websites for your research:

• Investors.com
• Nasdaq
• Macrotrends
• Stockrow
• Morningstar (Use the free version initially, and move to the paid version once you get better with valuation)

Conclusion

Finding the right stocks to invest in requires time, effort, and thorough research. By using the right tools and resources, you can make informed decisions and invest like a prodigy. Happy investing!