How to Pick Winning Stocks

December 26, 2009 by admin
Filed under Day Trading

When you are looking for stock market information on websites such as Yahoo! Finance, or on newspapers and magazines, you may be confronted with the option of whether to buy from the 52-week high price list or the 52-week low price list. The question is: which list would you choose your stock from?

You may tend to argue that, in absence of any other reliable information; you would like to opt for the 52-wheel low list. You may consider it a great bargain as the bottomed out company may possibly have better chances to go up than the company which has already reached the top.

You may further argue that a stock staying at 52-week low may have some good reason to be there and it might be waiting for the more opportune time– which is of course now– to rise up.

Or, you may opt for a stock from the 52-week high list even though it may violate the general rule against buying high. The stock may be showing steady growth.

There are several other factors, besides these two, that may prompt you to select a particular stock for investment.

You may think that although a particular stock has a high intrinsic value it may have lost its shine in the current stock market due to some other reasons. This may possibly be one of the reasons why it finds its place in 52-week low list.

You should try to invest in a stock that is not only going to survive in the coming stock market scenario but thrive as well.

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How to pick up a winning stock?

The truth is that all of us have a great experience and knowledge about the true worth of popular stocks, only we are not aware of it. Even an ordinary housewife who goes shopping into the malls for her household needs knows pretty well about the good quality stocks.

You select the products and services of those companies which are popular because of their quality and price. These companies, you can reasonably argue, have a better future.

The stocks of the companies whose products services you prefer to buy over the others are good candidates for investment. You do not have to be an expert in stock market to select a good stock for investment.

You may come across a service or a product which has been recently launched and has a great potential to grow fast in the near future because of its high quality and low price. The stock of the company offering this product or service is waiting to become a market leader.

More over if you are an experienced shopper either in the stock market or in the mall, you can look back to visualize what qualities in their products or services brought them to their leadership position. You may look for the same qualities in the upcoming stocks.

Take, for example, the case of Dell Computers-DELL in NASDAQ. Michael Dell is the poster boy for the Americans who dream of great futures. He started his business in his dormitory room while he was studying in a college. Twenty years down the line and Dell Computer is the biggest personal computer company in the world.

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Not many people know that the company that is actually credited with bringing the personal computer to the market is Apple and it commands barely 5% of the market share.

There are several other giants in the personal computer business, but not one of them approaches the popularity of Dell.

How did Dell achieve this greatness? It was because it started selling computers directly to the consumers before anyone had even thought of doing so when the Internet took off. It focused on meeting the consumer needs rather while other companies were engaged in improving the processor speeds and hard drives.

And who does not know about the reasons how Dell rose to its present leadership position? Every body does, but is still not aware of how to put his knowledge about Dell in selecting the stocks in computer market.

Look at the qualities that catapulted Dell to its present position and apply the same criteria to other companies or stocks and you get the winning stock you should invest in.

Of course, you must further confirm your judgment of the good stocks from your general awareness. You must also have some knowledge of doing fundamental and technical analysis of the stocks.