Chapter 2
Finding Companies to Study
Finding suitable stock candidates for study. Our plan is to invest in growth stocks--those whose earnings per share and sales are growing at a rate higher than that of the economy as a whole.
Find companies that have EXCELLENT Management. Just because a company has high sales and earnings, does not mean that it is a good company.
Also, just because a company is in a growth industry that does not mean that it is a growth industry.
Strong companies usually reveal themselves during "shakeouts"—unstable drops in the market. Those that still have strong sales during this time are good growth companies.
1. Look at the "Stocks to Study" in Better Investing magazine
2. NAIC's "BITS" publication, which is received by members of NAICs computer group
3. Publications such as Wall Street Journal, Business Week
4. Investor Advisory Service
5. Local newspapers highlights on local companies
6. Brokers/Business associates
No stock purchase should be made without LOGICAL thought. There is no room for emotions!
Do not focus on cheap stock--should be a quality, reasonably priced stock
Available to all NAIC members
You pay a one-time $7 charge for stock
When you purchase stocks via this plan, companies give you discounts on the price of their stock
Three Advantages of Investing:
1. Information on All Plan companies
2. You will be follow NAICs philosophy--invest regularly, reinvest your dividends, and buy into companies who will be worth substantially more in 5 years
3. The low cost will help the club to realize a profit more quickly