When your watch list of stocks has grown stale and you aren’t meeting your investment objectives, it’s time to go searching for some new stocks to follow. Finding these stocks can be a hit-and-miss adventure or a quick realignment of your focus, depending on how you decide to look for new opportunities. Although some people have difficulty finding new stocks, with today’s technology it should be simple to find opportunities and save time for deciding which of your newly-found stocks is the best investment for your money.
Write out your goals in reasonable, clear and concise terms. The National Endowment for Financial Education recommends using goal-setting as a method to begin any investment program. When finding new stocks, rather than focusing on the entire gamut of available options, focusing on those that can help you meet your goals can help limit the time it takes to fill your watch list.
Determine which type of stock best meets your goals. Small company and international stocks are much more volatile than mid-cap and large companies. For long-term goals, honing in on a collection of smaller and international firms may be appropriate, but because of volatility, longer term investors will do better sticking with large- and medium-sized companies.
Locate screening engines online at popular financial sites. Once you’ve decide on the types of companies to buy, screening tools can help you create a suitable list of possible investment choices. Sites such as Yahoo! Finance and The Wall Street Journal Online allow you to sort stocks. Try a few different options to decide which interface best meets your personal tastes.
Screen for stocks that meet your investment objectives. Working from your goals, screen companies to find firms sized to best meet your investment objectives. Use profitability screens to find companies with a track record of growing earnings. Use price-to-earnings screens to find stocks with a low price as compared to their earnings. Use a dividend screen to find stocks that pay investors cash dividends that you can reinvest or take as income.
Add familiar stocks to your watch list before choosing new names. Long-time mutual fund manager Peter Lynch helped investors make a fortune using a strategy he called “buy what you know.” By creating a watch list of firms that you admire and tracking them closely for investment opportunities, Lynch feels you’re more able to have a feel for the the stock and how it will respond to management changes or product cycles.