Best Stocks to Invest in, How to Find ThemThe best stocks to invest in for the long term should be fundamentally strong and able to stand up against anything that the market can throw at them. To beat the market in the long term you’ll have to figure out, how to pick the best stocks to invest into, or at least the most fundamentally strong stocks. Lately I’ve been testing out a new way of finding these fundamentally strong stocks using 3 different internet tools that anyone can use. These are the MSN Stock Scouter, the Fools Cap, and the Reuters Analysis opinion. If the stock passes all three of these tests I’ve been considering it to be fundamentally strong. This tool is really a computer generated software system that looks at individual companies and rates them on a scale of 1 to 10. It takes into consideration different fundamental factors as well as technical indicators. The computer then uses a formula to determine how well a stock will likely perform over the next 6 months by rating the stock on a scale of 1 to 10, 10 being the highest.
The stocks with a rating of 10 should theoretically be the best stocks to invest in when compared to the rest of the market. What I’ve been doing is getting a list of stocks with a rating of 10 and using them as stepping stones to conduct further research, using the next two tools. Another interesting tool is the Fool Cap Rating. The Monty Fool is a website for professional and armature value investors alike. You can join the community of 10,000s of members, discuss stock picks with others and rate stocks yourself. Every member can rate stocks themselves by either clicking on the Outperform or Underperform buttons on their site. Their Cap system takes into consideration the opinions of its members, the ratings of the members voting, and the time frame of the picks.
The Cap rating is built to let you find the best stocks to own over the long term. But I do see a problem with it, anyone can become a member and affect the rating of a given stock whether they know what they are talking about or not. The system does give more authority to investors who have made good picks in the past though, so it does try to read the mind of the “top investors” in their system, which can give you some peace of mind. Anyways the Cap reading ranks a stock from 1-5, anything 4 and up should be a relatively strong stock. I just started looking at Reuters for confirmation. They offer a basic analysis rating by people who are supposed to be professionals. Any stock rated “Outperform” or “Buy” can be used to confirm the other two internet tools.
Does This Find Best Stocks to Invest In? I’ve been testing out this combination for about a year now, and over that time stocks that pass these tests have been doing slightly better than the S&P. They probably will not knock your socks off by making huge short term returns, but they seems to be pretty consistently beating the market, at least in the short time I’ve been using it. It can also be used to just give a rough estimate of how strong a company is fundamentally, and then combine it with other indicators such as trend and oscillators. Or it can be used alongside other techniques such as selling puts and covered calls to make it more powerful. So, take it, leave it, alter it, whatever. But this does seem to give investors a decent idea of the relative strength of a company. Return From Best Stocks to Invest in to Fundamental Analysis Go From Best Stocks to Invest in to Stock Market For Beginners
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