3 more powerful tips for spotting the best Canadian stocks

These 3 tips for finding the best Canadian stocks have long been part of the advice we give you in our investment services and newsletters, including Canadian Wealth Advisor, our newsletter for conservative investing. We think they can help you spot the best Canadian stocks for your portfolio, too.

1. No stock can ever be so undervalued or desirable that it overcomes a lack of integrity on the part of company insiders: If you have any doubts about the integrity of insiders, sell immediately. There are no limits to the ways in which unscrupulous operators can and will cheat you.
   
   However, to enhance your long-term returns, not just avoid loss, you need to apply this tip in a moderate fashion. You need to distinguish between lack of integrity on the one hand, and naivete or poor judgment on the other. Many of the best Canadian stocks eventually run afoul of tax rules or regulatory decisions, for instance. If you take that as a sign of low integrity, you can wind up selling solid investments at market lows.

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2. Look beyond share price movements when looking for the best Canadian stocks: Share prices rise and fall based on a number of factors, including what’s going on in a company, its industry and the world.
   
   A stock never gets so high that it can’t keep rising, nor so low that it can’t keep falling. That’s why you have to look beyond price changes when deciding when to buy or sell.
3. Avoid focusing too heavily on cutting costs: Cutting the costs of investing has an immediate, obvious benefit: it leaves you with more money. But some cost-cutting investment techniques can wind up costing you money in the long run.
   
   For example, some investors routinely refuse to pay the market price for stocks when they buy. They always put a bid in below the offer price, in hopes of buying at a slightly better price. However, some of your best picks are going to go up as soon as you buy, and keep going up. Other investments will go down. If you always put in a bid below the current market price when you buy, you’ll filter out all your good investments. You’ll save a few cents from time to time. But you’ll always buy all your bad investment choices, and none of your good picks.

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