Question:
Just wanted to let you know that I am glad I continued with your service. I have been able to find some great stocks from your watch list. How do you find these stocks? Out of all the stocks that have increased in the most in the last few months, do they have something in common that the other stocks that have not gone up as much have?
My Response:
As far as finding companies that will be included in the database, I use a variety of screening tools to filter out companies that meet my requirements for a "financially superior" company. Certainly companies that go on to big gains are often companies that are experiencing accelerating growth and rising margins and ROE (hint: companies with surging ROE and Profit Margins should be singled out – these will be your big winners). In addition they will most likely come from the strongest performing industries at the time (which you can easily locate by clicking the Top Industries tab in the members portal).
Example: Lets say I want to get a list of companies with best fundamentals and a part of a top performing industry. What I’d do is Click the Top Industries tab, then click Show All Stocks. Then sort by F Rank to bring the highest scores to the top. By doing so, you get a Top 10 list like this: QSII, ADEX, SNDA, XXIA, ASVI, GILD, CKCM, UPL, CSCD, NSS and BHP. However, as you know you’ll want to focus on companies that are above the 50 DMA and within a buyable range and/or near a breakout. From the above list, only BHP and ASVI meet these requirements.
A more efficient way of achieving the same results, but filtering out stocks that don’t meet the above requirements can be had by clicking the "Breakout Watch" tab and hitting the "Filter by Top Industry" buttom below the search function, then sorting by F Rank to bring companies with the best fundamentals to the top. This will give you a list of stocks worth watching or still buyable that are part of a top industry currently very quickly. So, you’ll notice the top 10: BHP, JOYG, AKAM, RIO, ECLG, UNT, LSS, NBR, APA and PDC. (primarily metal and oil stocks!) Just be sure to pay attention to when each company will report earnings (these dates appear in the far right hand column).