A well-crafted watchlist is critical to smart investing: It can help you find attractive buying opportunities, and it can save you from bad decisions.
After all, investors can be their own worst enemies. When we overreact to the day's news, we make rushed decisions driven by emotion. A watchlist can help you slow down the process, examine the risks, and essentially take a deep, money-protecting breath.
But what to put on your watchlist? Today, Million Dollar Portfolio associate advisor Charly Travers shares three companies that have taken up residence on his watchlist and one that has since made the jump to the Million Dollar Portfolio team's portfolio. By the way, the Fool now offers MyWatchlist.com, your customized hub to follow the performance and Fool news and commentary about the companies you're watching.
One to watch
In the run-up to President Obama's inauguration, the nation's gun buyers went on a shopping spree, fearful that their access to firearms would be curtailed. With their gun-purchasing needs taken care of, sales in the industry slowed, meaning a lull for Sturm, Ruger
New management came on board in 2006 and turned Sturm, Ruger into an efficient, incredibly profitable firm. The leaders don't bother talking with industry analysts; they're just focused on creating consistently outstanding results.
For now, Charly's keeping an eye on the FBI and the number of background checks the agency is running on prospective buyers -- a proxy for demand. Once that number starts to climb again, look for Sturm, Ruger to capitalize.
Two to watch
Similarly, Lumber Liquidators
The company is in the fourth or fifth inning of its growth story -- it has around 215 stores and could comfortably expand to 400 -- and revenue per employee during 2009 was around $600,000. Charly's waiting to get comfortable with the recently reported numbers and ensure that there are no surprises therein, but he sees this as a long-term winner.
Three to watch
And one he bought
"I never thought I would be interested in buying shares of Microsoft
But it's impossible to ignore the numbers. Even with recent stumbles and a lack of resonance with consumers, Microsoft is humming with business clients, to the point that its free cash flow for the past quarter is equal to Google's free cash flow for the entire past year.
"It's hard to imagine that Microsoft got to be overlooked, but that's exactly what happened," Charly says. "And it got to the point where it was just too cheap not to buy."
And that's exactly why it pays to watch. You can make smarter investing decisions with your own version of My Watchlist, new and free from the Fool. Click below to start following one of the stocks mentioned above:
Roger Friedman doesn't own shares of any companies mentioned, but they're all now on his watchlist. Google and Microsoft are Motley Fool Inside Value picks. Google and Lumber Liquidators are Motley Fool Rule Breakers recommendations. Apple and Coach are Motley Fool Stock Advisor selections. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Apple, Coach, Google, Lumber Liquidators, and Microsoft. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.