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Finding stocks

How to find the best stocks: a step-by-step method

"The best stock" is the one that fits your goal at a sensible price. A simple method: decide what you want, screen for it, check the business and its numbers, and compare it with its peers.

Jump to another part of the path?

1. Know what you want

Growth investors want companies that increase sales and profits fast; dividend investors want a steady, rising income; value investors want good businesses at a low price. Decide too how long the money can stay invested - shares can fall a lot in a year but have historically risen over decades.

2. Screen the whole market

A screener lets you filter thousands of companies by numbers such as revenue growth, P/E, dividend yield, debt and market value, and rank them. Start with a ready-made profile and adjust one limit at a time, so you see what each choice does to the list.

3. Read the numbers behind the list

Open the companies on your list. Look at several years of revenue, profit and free cash flow: are they rising steadily or jumping around? Is the debt small compared with the profits? Do the price ratios look reasonable for the growth? The stock pages explain every figure in plain English.

4. Compare with the industry

A 10 % margin is weak for software and strong for a supermarket. Compare each company with its peers (research step 4 on every stock page) and favour those that beat their industry on the things you care about.

5. Keep a short list and a reason

Write down why you like a company and what would make you change your mind. Spread your money over several companies and check them when they report.

Try it in the screener

The Growth profile shows companies that are growing fast. It is a learning example, not a recommendation.

Show growth stocks

This content is general information, not investment advice.