Every individual investment should be evaluated on its own merits. However, some sources are good starting points to begin your investigation.
1. Stock Screening tools. These tools provide a list of stocks that meet a certain numerical metrics, such as low P/E ratios. There are several free screeners available on the internet (Yahoo has one).
2. List of stocks from pre-defined screens. Smart Money and the Wall Street journal publish the results of more complicated screens (take into account more metrics). The AAII also has several pre-defined screens that are based on famous investing strategies. These are a good starting point.
3. News related to companies you already follow. Often news items refer to other related companies involved in the story.
4. Headline news about particular companies that seem interesting.
5. Companies that are in the industry that you work in. You knowledge of the industry could be a big advantage in evaluating investment opportunities.
6. Companies whose services you use. Fox and the Hound is one example (a prior stock of the month) that was selected after having a few beers there, and doing some research to see if it was public company.
Investment ideas are all around you. Once you get an idea, follow up on it. Document the idea, and begin to do your research. I create a special transaction “Stock Ideas” in Checklist Investor to track companies I’m researching. This allows for quick viewing (click on Transaction tab to see only those transaction types).
