Individual Stock Check List

How to select best stock?

Some investors like to buy high growth stocks as they break their all time price highs.

This can be a useful strategy, but be aware that momentum strikes in both directions (up and down)!

1)      Did this stock have a huge increase in its most recent quarter's Earnings Per Share (at least 25%)? What was the percentage increase?

2)      Does the quarterly sales growth match the quarterly earnings growth? What was the sales growth rate?<\Item2>

3)      Over the past year, did this stock increase its yearly Earnings Per Share by at least 25%? What was the percentage increase?

4)      Does the Yearly sales growth match the Yearly earnings growth?

5)      What was the sales growth rate? Over the past 3 years, what is the Earnings Per Share for each year?

6)      Is the company releasing any new products. If so, describe the product, and what percentage of total sales it will make up over the next year

7)      Has new management taken over leadership of the company? If so, what is the track record of the new management?

8)      As the old saying goes, let your winners run! Trends tend to continue. Is this stock close to or at an all time high?

9)      Smaller stocks usually perform better. What is the market cap of this stock (total shares outstanding times the current share price)? A small cap stock has less than 1 Billion in market cap.

10)  How much of the company does existing management own? A high percentage (10-30%) is a good sign.

11)  In the industry that this company participates in,  list the top 3 leaders. If this stock is not in the top 3, describe your reasons for your interest.

12)  The largest demand for stocks comes from institutional investors. For big price increases, the institutions have to become interested. What is the percentage of institutional ownership in this company? You can find this information of the Yahoo.com finance research section.

13)  How many shares are traded each day? Watch out for thinly traded stocks, since you may have trouble selling when you want (for a price you want).

14)  What is your prediction of the general Market direction, Up, Down, or Flat?

15)  To protect yourself, after you purchase a stock, put in a stop loss order at 10%.

16)  If you detect a market downswing, quickly sell some of your holdings and keep 25% or your assets in cash.