My Stock Picking Strategy

When I describe my stock picking strategy, many people think it's weird.

I wrote about my Stock picking strategy before, you can read it here.

Here is my updated list:

1. The stock should pay dividends. I added it as a rule. I still have stocks from my "before dividends stocks picks", which I am waiting to sell.

2. I have my list of stocks I like, which I update monthly here

In order to put stocks on my list I look through

- all financial data - Ratios, Income Statement, Balance Sheet. I make sure all their numbers are positive and debts make sense.

- 10K, 10Q (not always) - usually if this is unfamiliar stock and I need more info

- company website, especially if I am unfamiliar with industry or stock. The stock should make sense to me - well known brand, love by many, one of necessities, have future, etc.

- Insider transactions ( I do not like when insiders are selling)

- Historical prices and years of dividends

- Current articles and reviews (just to see what's going on)

I watch my list on yahoo finance. I created my customized view, which helps me track my stocks.

It includes

Stock name / stock price / change&%change / 52-wk high/ 52-wk low / Yield / EPS/ PE/ Div Pay date/ Ex Div Date/ 1-yr Trgt price

I like how I can sort by different criteria and I can easily see how each stock is doing.

3. I move stocks to my "Maybe to buy list" if

- stock is already on my watch list (it means I already research stock)

- it is trading close to 52 week low

- 1 Year Target Price is higher then stock trading price

4. I sell stock if it earned >35%, not including dividends, stock is trading at the same price with some ups and downs for 2-3 months and if the current price of stock exceeds 1 year Target price.
I mostly use my IRA accounts for these kinds of transactions.

Some of you asked me why I sell my winners. I have limited capital and by rotating stocks - repeatedly selling winners/buying losers I can increase my capital faster.


5. New stocks. 

- I review % Losers and Most Active on Yahoo Finance daily. I check if any stocks can be added to my list.

- I analyze other bloggers stocks picks

- I read Financial part of local newspaper.

Here is my small beginner tutorial I made for my son - How to pick a stock for Loyal3

How to Start Investing in Stock Market with $10 and hopefully earn $$$

What about you? How do you pick your stocks?








2 comments:

  1. Good job! That is thorough research.

    Some things I look at it are:
    - Dividend Yield (prefer 3% or higher)
    - Dividend history/years paid/years increased (I like Dividend Aristocrats)
    - Current dividend yield versus 5-yr average
    - % below 52-week high
    - P/E ratio; current vs. 5-yr average; current vs. industry average
    - P/B
    - Beta
    - Payout ratio
    - A company I understand; whose products/services I use; has large market share; well-established
    - My gut instinct

    My stock-picking strategy continues to evolve and may be a little different each time I purchase stock.

    Regards,
    Dear Dividend

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    Replies
    1. Hello Dear Dividends, thanks for sharing your strategies! Yes I do dividends history and prefer 3% of higher and my gut instinct as well. :) and I keep updating my strategies too. I guess we live and learn.

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