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Find the Best Stocks Using Investors.com Screening Tools

February 20, 2009 | Financial Tips | 7 Comments

If you are an amateur investor thinking about investing in the stock market, beware! Over the years, I’ve spoken to many people about investing in the stock market and I cringe when I hear people get excited about buying stocks that are cheap or have dropped a lot. I’m certainly no expert, but I’ve learned a lot of what “NOT TO DO” when investing in the stock market.

A few months ago, I had a friend tell me that now may be a great time to buy Ford stock. Of course I immediately cringed and  asked him why he would take such a risk on a company  in an industry that’s doing so poorly. He stated the stock was cheap and he “felt” Ford would rebound one day. I then asked him; why not find a company that was performing excellently? He answered, “That’s a good point.”

I then went on to tell my friend my basic philosophy of buying a stock. It’s quite simple. Buy the best stock you can find. Not number 2 or 3, find the best – number 1. Don’t worry about the share price, or how many shares you can purchase, worry about the % return. There are many expensive stocks that can double giving you a 100% return. Would you prefer to buy a stock for $5 and have it go to $6, for by a stock for $75 and watch it go to $150?

Below is a screen shot of Ford’s stock and NetFlix’s stock? Which one would you take a chance on? I sure wouldn’t be buying Ford’s stock.   I would have a much better chance with NetFlix, just by looking at the stock chart.


Ford vs. NetFlix

(Which stock would your take a chance on?)

NetFlix vs. Ford

 

So the question is, how do you find the best stock? Over the years, I’ve tried many techniques such as online screening tools, reading newsletters that recommended stocks, visitng forums/chat boards to get ideas, and creating my own system to identify great stocks. Then one day I ran into Investors Business Daily’s (at Investors.com) website and was really impressed with how easy and quickly they made it to screen the market to identify the best stocks. I’ve used their service in the past and have purchased stocks based on IBD screening tools, which made me money. Their system really works!  Now, I’m not saying that every stock identified as an A+ did well.  But out of every 10 stocks I purchased, 6-8 of them did well over a 6-month period. The other 2-4 didn’t do so well, but I didn’t loose that much money. Overall, my portfolio was profitable.

One of the tools I like to use is the IBD Stock Checkup. You enter the stock symbol and it gives you an overall ranking. The stocks are ranked from A+ to E; A+ being the best stock and E being the worst stock. The rank is based on the stock’s technical rating, fundamental rating, attractiveness rating, and the stock’s group technical rating and fundamental ratings.

Let’s say you are considering purchasing Ford. You can get a ranking using IBD Stock Checkup.


IBD Stock Checkup for Ford Motor Company
Screen Shot of Investors Daily Checkup for Ford

Would you purchase Ford based on the information above? I would not; I want to find an A+ stock! . See the IBD Stock Checkup for NetFlix below.

 

IBD Stock Checkup for NetFlix
Screen Shot of Investors Daily Checkup for NetFlix

I would certainly consider taking a chance with NetFlix’s stock.

Investors.com also features several other tools to find A+ stocks which include:

  • The CAN SLIM Select tracks market–leading stocks that in general show strong earnings growth, positive institutional sponsorship, excellent industry strength, and solid sales growth, profit margins and return on equity. I’ve purchased stocks from this list that did well.

  • The IBD 100 List the daily top 100 stocks based on their ranking system. (See example here).

  • Daily Stocks on the Move lists the top performing stocks for the day.

 

Investors.com is filled with tons of educational material on how to be successful in investing in stocks and really helps individuals identify top rated stocks. You can sign up for a 4 week free trial to check out their service. If you are looking to purchase stocks, I highly recommend Investors.com. Good luck; but remember it’s never a profit until you sell!

For more information visit Investors.com.

 

 

 

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7 Comments to “Find the Best Stocks Using Investors.com Screening Tools”

  1. Chrisfs
    1:10 pm on February 21st, 2009

    Canslim is based on finding growth stocks, however in this economy, growth stocks are few and far between. It also has a shorter time horizon. If I buy Ford right now at 1.78, there is a chance in the next two years that it will go to 4, a much better chance than seeing Netflix got to 68. Stock price does matter at some point.

  2. Roger
    12:15 pm on February 22nd, 2009

    Chrisfs, if you buy Ford right now instead of a stock like NetFlix you are crazy. Apparently, you didn’t read the article close enough. You would be buying a “dog stock” hoping it will rebound one day. There is a good chance that Ford could file for bankruptcy within 1 to 2 years and the stock could go to 25 cents per share.

  3. Chrisfs
    12:56 pm on February 22nd, 2009

    If Ford truly goes bankrupt the stock would go to 0 not .25. and there’s the risk

    however, there’s a good chance that after 5 years it will be at something like 30, which would be a 20 times (2,000%) return, Netflix likely won’t be able to match that.

    Rather than following a canslim model, I think now is a much better time to look at a model that finds long term value in stocks. Look at what Warren Buffet has been putting money into. General Electric and Credit Suisse. Canslim would completely avoid these, but they are companies that while they won’t be going anywhere for the next 6 months will definitely come back.
    For Netflix to double, it would have to hit 70, it’s near it’s 52 week high right now, which is impressive and it’s probably going to do well as people want to do cheaper things and rent movies at home rather than go out, but is it going to hit 70 ? I don’t think so.

  4. Roger
    5:21 pm on February 22nd, 2009

    Chrisfs, I guess only time will tell. But I’d risk my money on a company that’s doing well vs. a company that’s struggling.

    You are correct that historically the auto industry has been cyclical. But I wouldn’t be tying up my money in a stock that maybe down for years to come. I’d wait until the Ford news improves and I see the stock going up. But right now I don’t think Ford has hit the bottom as yet. If GM or Chrysler goes belly up it will hurt Ford’s stock even further.

    If today I had to between Ford and NetFlix, it’s definitely NetFlix.

  5. Chrisfs
    2:09 pm on August 18th, 2010

    Hi, Remember me ?
    I bought Ford at around $2 in March of 2009, and sold it in April of this year for $12.67. If you look at Google Finance, you’ll see that as of today, Ford would have returned 510% whereas Netflix returned 248.64%. Netflix did outstanding but it only did half as well as Ford, because Ford had much more room to go and wasn’t going to disappear any time soon. The bankruptcies by GM and Chrysler did not hurt Ford’s stock price.

    I bought and sold GE and PMI at the same time frames (on the same days) and repeated the performance. I also bought GM, but since it was cheap to begin with, it didn’t have far to fall and I sold it early at a break even point.
    While growth models are valuable, if you leave out value based models and turnarounds, you are missing out on a vast section of potentially winning stocks, especially at times when the market as a whole isn’t doing that great.

  6. Roger
    5:05 pm on August 18th, 2010

    Hey Chrisfs, I remember you. Wow! That is a fabulous return with Ford. I guess you were correct. Now I wished I would have purchased some Ford stock as well.

    Netflix didn’t do so bad either. However, many stocks had a good run-up from March 09 until early this year. So what’s the next stock you plan on buying?

  7. oj
    4:37 am on January 22nd, 2012

    how’s that Netflix working for ya !!!

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