So far, I’ve spent over 10 years on a full-time basis looking for attractive stocks in which to invest. Previous to that, I followed the stock market for many years on a daily basis without getting paid to do so.
During this time, I’ve learned a tremendous amount about the equity markets, investor psychology, and about business. I’ve seen a lot of stocks go up and down, but I’ve found that the best wealth creating stocks tend to offer investors the good “package,” rather than any one catalyst for investment.
I know that you can make just as much money from a large-cap stock than you can with a small-cap stock. A company may not be growing at the fastest rate, but its valuation could be attractive and it’s what investors are interested in at the time.
So, when looking for the most attractive stocks in the marketplace, consider if it offers a “package.” Many of the companies we’ve talked about in this column offered great packages. Some include: VCA Antech Incorporated (NASDAQ/WOOF), Luxottica Group S.p.A. (NYSE/LUX), Huron Consulting Group Incorporated (NASDAQ/HURN), LJ International Incorporated (NASDAQ/JADE), Omniture Incorporated (NASDAQ/OMTR), and Zumiez Incorporated (NASDAQ/ZUMZ) to name just a few. All these companies offered more than one reason to buy the stock.
Perhaps it has to do with great industry fundamentals, strong pricing power combined with a new technology, the right capitalization, the right valuation, and the right investor sentiment. All kinds of factors affect how a stock performs, so as the investors, you need to consider as many of those factors as possible before you invest.
If you spend enough time looking for good opportunities in the stock market, my experience suggests that the most attractive stocks tend to jump out at you when they come across your desk. The vast majority of these stocks tend to offer an attractive “package” to the investment community. There isn’t just one reason to buy the stock.
If you spend the time looking for good stocks in the marketplace, I guarantee that you’ll find these kinds of opportunities. Taking the time to look through the stock market on a daily basis is the best thing you can do to improve your investment returns. You can’t be a great golfer without playing every day.