Stock Ideas
...where to get started
by Mark Weaver
(MWEAV)
SPRINGFIELD, IL (July 30, 1998) -- After a recent losing streak, the markets returned to their winning ways today. The S&P 500 climbed 1.58%, the Nasdaq 2.03% and the Borefolio split the difference rising 1.97%. Six of eight Borefolio holdings rose.
Rising most dramatically was Cisco Systems (Nasdaq: CSCO), up $ 4 7/16. There was no company specific news but I do note that Fortune Magazine has picked 'the Kid' as one of the best stocks to provide an investor with a good retirement. The magazine bases this recommendation on Cisco's well above-average growth potential. I am anxiously awaiting the finale of Greg's analysis of discounted cash flow focusing on Cisco which should appear right in this spot tomorrow night.
Atlas Air (NYSE: CGO) was also a big gainer, up $2. Atlas took delivery on the first of its new 747-400's yesterday. This marks the beginning of the transition of the company to the newer, quieter aircraft. Quieter is better because of the upcoming implementation of noise rules which will make the supply of qualified 747-200s dwindle. Atlas Air hopes to have the largest fleet of 747-400s when those rules are in force.
In the absence of much in the way of meaningful news, I thought it might be useful to spend some time reviewing sources for investment ideas. If an investor doesn't know a stock exists it is difficult to make an investment in it!
There is actually an overload of information sources for the investor in the "information age." There are numerous monthly publications, newsletters, websites, newspapers, message boards and the like. There is no way for an individual investor who wants to have any free time to cover everything that is out there. I have tried a lot of publications but I've settled on a select few that meet my needs quite well. Much of what is out there is abject junk -- caveat emptor, especially with some of the web-based sources.
This is the approach I take: After checking the standings in the sports page, I read the Wall Street Journal, Investor's Business Daily and occasionally I get a glance at the New York Times Business page. When reading these papers I focus on articles about specific companies and on themes which might affect the economy -- for example rising oil demand or the Asian crisis. Some great ideas come from all of these papers. Investor's Business Daily is a particularly good source for stories on growing companies.
Each weekend I read Barron's and after battling off the bearishness of that publication I can occasionally get a great stock idea. Some of the columns in the Market Week section are particularly useful. The only magazines I read are Individual Investor and Forbes. Forbes highlights companies from a business perspective more than an investment perspective. I find that a company in an interesting business or an executive in the process of turning a company around can be great fodder for further research. Individual Investor covers small caps better than most publications and that makes it a good source for these less mainstream stocks. There are several other monthly rags, but I don't read them. One thing that I routinely ignore in any of these publications are the columns in which a writer touts or suggests a particular stock. I prefer to look at stocks without authors' biases.
On the newsletter front, Value Line is invaluable. Not only do you get an analyst report on the stocks but you get a wealth of financial information that is useful when analyzing a particular investment idea.
Finally, one of the best sources for information is right here in Fooldom. The Evening News, Investment Ideas (especially the Daily Double and Daily Trouble feature) and the message boards. Countless individuals posts ideas every day. If I do say so myself, the Boring Stocks message board participants have suggested a number of great stocks over the past couple of years. That board is always linked in the top right of this page that you're reading now.
Another way to get ideas, as outlined in Peter Lynch's books, is to pay attention to what is going on around you. If you see a packed chain restaurant you might want to see if it is publicly traded. When you see Wal-Mart effectively taking out all of its competition you might want to check out the stock. When you find out that there is a six month wait to get a product you might want to see how the stock is doing.
Once you've identified a company that merits investigation, the real work begins. But, without an idea the work never starts..
Stock Change Bid ANDW - 1/16 17.31 CGO + 2 38.50 BGP - 7/16 32.50 CSL + 3/4 44.19 CSCO +4 7/16 98.44 FCH + 15/16 28.06 PNR + 9/16 39.75 TBY + 3/16 8.63 |
Day Month Year History
BORING +1.97% -1.83% 2.37% 28.81%
S&P: +1.58% 0.80% 17.78% 83.87%
NASDAQ: +2.03% 1.31% 22.24% 84.41%
Rec'd # Security In At Now Change
2/28/96 400 Borders Gr 11.26 32.50 188.73%
6/26/96 150 Cisco Syst 35.93 98.44 173.95%
8/13/96 200 Carlisle C 26.32 44.19 67.85%
3/5/97 150 Atlas Air 23.06 38.50 66.97%
4/14/98 100 Pentair 43.74 39.75 -9.13%
5/20/98 400 TCBY Enter 10.05 8.63 -14.14%
11/6/97 200 FelCor Sui 37.59 28.06 -25.35%
1/21/98 200 Andrew Cor 26.09 17.31 -33.64%
Rec'd # Security In At Value Change
6/26/96 150 Cisco Syst 5389.99 14765.63 $9375.64
2/28/96 400 Borders Gr 4502.49 13000.00 $8497.51
8/13/96 200 Carlisle C 5264.99 8837.50 $3572.51
3/5/97 150 Atlas Air 3458.74 5775.00 $2316.26
4/14/98 100 Pentair 4374.25 3975.00 -$399.25
5/20/98 400 TCBY Enter 4018.00 3450.00 -$568.00
1/21/98 200 Andrew Cor 5218.00 3462.50 -$1755.50
11/6/97 200 FelCor Sui 7518.00 5612.50 -$1905.50
CASH $5528.69
TOTAL $64406.82
