Spend each morning scouring the Internet for investment ideas. Build a favourites list of financial sites you can review each morning to discover new stock ideas. Such sites could include GlobeInvestor.com, National Post, The Wall Street Journal, SmartMoney, Forbes, MarketWatch, Barrons, and many others. Treat any new idea found as a starting point for further research and analysis.
Pay attention to local and national stock gurus. BNN and CNBC feature many of the industry’s top stock pickers. These individuals often provide valuable insight into the market and individual stocks, particularly when offering their top picks. The financial channels and their online archives are a great source for qualified stock ideas.
Perform online stock screens. With over 11,000 publicly traded stocks in Canada and the US, online stock screens are an excellent tool to filter out stocks that meet specific investment criteria. Use such screens to create short lists of stocks. Then research each one until you arrive at your final selection.
Keep a close eye on insider buying activity. One of the best methods for identifying promising investment ideas is focusing on stocks enjoying significant insider buying by the CEO, President or CFO. There are many reasons to sell shares, but only one to buy. Given a senior executive's knowledge of a company’s prospects, stocks with large insider purchases deserves serious evaluation.
Monitor stocks hitting 52 week highs and lows. If you monitor every stock hitting a new 52 week high, you will never be left unaware of an emerging winner. Keep track of new highs particularly in down markets. Clearly, these companies are doing something right. Also, keep an eye on 52 week lows. The greatest gains in the shortest time periods often come from turn arounds. But focus on large caps where the odds are better.
Keep track of IPOs, particularly spinoffs. Studies have shown that spinoffs often turn into lucrative investments. Given the favourable odds, be sure to review each IPO that involves a spinoff for potential investment.
Request investor packages from the companies you consider. As they arrive, read their annual reports, analyze their financial statements, determine their valuations, and compare them against their peers.
Call companies to answer your questions. Every company has an investor relations department to serve investors. For smaller companies, the CFO or President are usually accessible. If you are going to invest a lot of money in a stock, there is no need to settle with unanswered questions. Call the company and then make your decision.