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.
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.
What about you? How do you pick your stocks?