One area that most investors find difficult is finding stocks to analyze. It really isn’t difficult though.
Keep a pen and paper handy throughout the day and by the time you go to bed, I’m sure you will have at least 10 names to look up.
The secret is keeping it simple
The Investing Funnel of Stock Ideas
Finding investment ideas is like using a funnel.
If you start with 30 stocks and you believe that 20 are worth further investigation, you have either discovered a secret formula that you should patent immediately and sell to make your millions, or you are simply doing it wrong.
Here’s an image I found similar to what should happen.
You want to be able to toss the losers and keep the potential winners. If you have a set investing method that you stick to, even better. This is where an investing checklist will come in handy. You can quickly eliminate stocks that fail to meet your criteria.
Say you like to invest in Buffett-type stocks, make a list of the main criteria that a company must pass and use it to filter down the list of ideas.
I mentioned in a previous article discussing the Benjamin Graham Investing Checklist, where Graham and Walter Schloss spent all day filling into their checklist a number of companies to filter investment ideas.
He [Graham] and Walter collected numbers from the Moody’s Manuals and filled out hundreds of the simple forms that Graham-Newman used to make decisions – p. 185 "Snowball"Doing it like this will let you filter that list of 30 stocks down to 2 or 3.
The Practical Guide to Finding Stock IdeasBut you still want to know where to find the initial 30 stocks?
Do this first if you haven’t.
Create a bookmarks folder in your browser or use something like diigo or evernote to save the sites I list below. Don’t over bookmark or over save stock ideas online. You’ll just get information overload.
Now visit the following sites to get your list of stock ideas. Each site has its own investing style, so look through it and select the list that best suits you. Don’t be like me and try to go through everything. I only have to because I need to keep this blog fresh.
10 Websites Offering Extensive Stock IdeasAAII Shadow Stock Portfolio: AAII’s own flagship portfolio. You can access the list for just $29 a year. They have a very good list of value-orientated stocks. The stock selection criteria can be found from this link. I was so cheap, it took me two years before I paid up. Nowadays, I’m willing to pay for anything that will save hours of my time instead of wasting time performing tasks that don’t add any value or amount to much.
AAII also has 78 predefined screens, but I do not recommend its stock screens.
Cheap Stocks Blog: Purely cheap stocks. Mostly small caps. The portfolio has some serious alpha. I’m amazed at how his picks continually do so well.
Earnings Torpedo: Created by the Ross School of Business from the University of Michigan. A list long and short ideas. The stock selection criteria is unknown.
Fortune 100 Best Companies to Work For: Not all publicly traded but if a company gets on this list, the employees are happy. If employees are happy, business tends to do well. If business does well, then you make money.
Forbes 100 Best Small Companies: One of my favorites. Most are high-flying small-growth stocks which I like to keep an eye on in case it crashes for some reason.
Forbes Most Innovative Companies: List of fast-growing companies from around the world.
Forbes World’s Biggest Public Companies: If you prefer large caps.
GuruFocus: Find your favorite investing guru and see what he holds. Get ideas from the pros. Requires an annual membership.
Old School Value Pre-definded Value Stock Screeners: 14 pre-defined lists focused on value strategies ranging from small to large caps.
TheLion.com Highest Gainers and Losers: Watch which stocks jump or fall to get ideas.
About the author:
- Prebuilt valuation models so that you don't have to waste time building your own.
- 100% transparent valuation and formulas. See how everything is calculated.
- Analyze and value stocks using multiple angles and viewpoints instead of just a single DCF.
Save time, make smarter decisions and make more money.