When you are a beginning investor, once you’ve started formulating your strategy, you get to the point where ask yourself — what are some good stocks to buy? You can study all you want, but until your hard earned money is in the market, you really won’t know how your decision making will hold up. Here on this site, I’m just getting started and learning to put all of it together. One of the first steps to finding a good stock to buy is by developing good stock market investing screens to help you determine what stocks you should be looking at purchasing.
The goal of stock screens is reduce the overall pool of stocks to choose from to narrow them down into a smaller watch list of stocks to analyze. In my research on stock screens, I came across a site that uses CANSLIM as it’s base investing strategy and that talks about stock screens and William O’Neil’s strategy and how he’s adapted it to his needs. His site is ChrisPerruna.com. He goes into great detail about how he goes about finding good stocks to buy now and seems like he has perfected and honed his strategy. This is where you want to get your investing system set up. You need to get to the point where you have a specific set of steps that you follow each day, each week through every buy and sell. That’s what he’s done. You need to do the same.
You’ve got to set up your own system to uncover the stocks worth pursuing and those are going to be your best bets. Rather than relying on others to to tell you the best good stocks to buy right now, get in the habit of finding them yourself. Here’s why. Yesterday, I was reading Yahoo finance and they said that Macy’s was a good candidate for filing bankruptcy along with Hertz and a few others. Then, later in the day, on Investors.com market wrap, they mentioned Macy’s stock along with Kohls. In this video, they actually said that Citigroup (I think that’s who it was) actually changed their rating from a HOLD to a BUY recommendation. I looked at the stock in daily graphs and the sales and earnings look lousy. Earnings aren’t really estimated to get better until 2011. It also showed me that their were some 249 institutions that owned the stock. The quarterly earnings per share percentage change last quarter was a negative -31% and sales were down -10%. Here’s a screen shot:
That leads me to ask why was it’s recommendation changed to a BUY. Here’s the recommendation:
Here’s my theory. There are a lot of institutions that have bought into this stock and it’s pushed the price up. Now, they need to get out and they need buyers. It seems like common sense to me that the last stock you’d probably want to buy in a recession would be one like Macy’s in a retail industry. Everybody’s already bought the back to school clothes and now they are waiting on the holiday season.
That’s why when you see lists like “Good Penny Stocks to Buy Now” and “Good Stocks to Buy in 2009″, you really need to question how they got on that list and focus on developing your own.
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I found out that the, “penny stocks to buy now,” postings are in a way rigged. Found that out the hard way. Almost pure gambles. I see in previous post you mention William O’ neils name alot. Because of you his book should be on my doorstep when I get home. I’m currently reading a book I bought a few years ago when in college by Jim Cramer. Didn’t really have extra income to invest back then so put it on the shelf until now. I know he has his wacky ways to educate people, especially amateurs , about the market, but what do others think about him. I’m 1/3 through this book and find it very helpful myself.
@Jordan,
I am glad that you reported on that because a lot of people get taken that way. I am a big fan of O’Neil so I am glad that you have started to look in to his book. I like Cramer. I haven’t read his methods and for all I know they may be sound. BUT, even Cramer has admitted that he even worked the market with fake news to manipulate a stocks price. For entertainment, he’s great, but because he has admitted to manipulation in the past, I’d take his show at entertainment value only. (Kind of like my site…lol!) As far as last year, he’s even fell asleep at the wheel according to his appearance on the daily show a while back (Excerpts on youtube here). For our purposes, the more we can tune out the noise the better. Good luck. Keep us up to date as we formulate the CANSLIM trading room here.
They’re one of the best stocks to buy because of the little cost they represent and the big chances you have to get money out of the deal. With normal stocks you’re going to have to invest more than a thousand times more to begin making some real profit out off them. I’m not saying you shouldn’t invest in them, by all means do so. The thing is that if you’re starting out – even if you’re already experienced – going with penny stocks is a wise decision.
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