How to Pick a Stock for the First Time

Every investor wants to know how to find the best stock. If you're a beginning stock picker, take a look at the steps below to get a head start.

By Adam Levy – Updated Jul 7, 2025 at 12:52 PM

Key Points

Identify your investment goals to guide the choice of stocks for income, growth, or stability.
Invest in businesses you understand to mitigate risks and make informed decisions.
Look for companies with a competitive edge and price stocks below your estimated fair value.

There are a lot of ways to pick a stock. You could train a chimpanzee to throw darts at the financial section of a newspaper to select a random portfolio, and the chimp would beat Wall Street about half the time.

But if training chimps isn't really your thing or you simply can't find a newspaper, there are easier ways to pick stocks. And as an individual investor with a long time horizon for your stock purchases, you stand at an advantage over Wall Street's short-term focus.

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An infographic outlining the five steps of how to buy stocks. — Image source: The Motley Fool.

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Dividend Income

Dividend income is defined by the IRS as any distribution of an entity's property to its shareholders.

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A castle with a moat. — Think of a business like a castle. It needs a wide moat. Image source: Getty Images.

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How Many Shares Should I Buy of a Stock?

So you've found a company to invest in. How many shares should you buy?

How to Invest in Dividend Stocks: A Guide to Dividend Investing

Take a closer look at how to invest in stocks that pay a dividend.

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Exchange-traded funds let an investor buy many stocks and bonds at once in a single transaction.

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From defense applications to amateur photography, drones -- and drone stocks -- are flying onto investors' radars.

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There's no need to get the absolute lowest price possible for a stock. Trust yourself that you did the research necessary to make a good decision, and when the price looks good, take it. If you follow the above steps and build a diversified portfolio of stock picks across several sectors, you'll be sure to find some winning investments.

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About the Author

Adam Levy is a contributing Motley Fool stock market analyst covering technology, consumer, and financial stocks and how policy, economic, and consumer trends shape personal finance, Social Security and retirement savings. Before The Motley Fool, Adam was a financial advisor at Edward Jones. He studied finance and electrical engineering at Carnegie Mellon University.

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