True Blue Chips pay off

Learn everything you need to know in 'The Best Blue Chips for Canadian Investors' for FREE from The Successful Investor.

Canadian Blue Chip Stocks: Bank of Nova Scotia Stock, CP Rail Stock, CAE Inc. Stock and more.

Topic: Blue Chip Stocks

The Best Stocks to Buy Right Now Will Share Many of these Qualities

If you could find a stock that meets a variety of these attractive factors, then you may have found one of the best stocks to buy right now

When looking for the best Successful Investor stocks to buy right now, we look for a number of attractive factors. These include a prominent place in an industry, a history of earnings, a history of dividends, involvement in a fast-growing industry, hidden assets, the possibility of a takeover bid, and many others.

Lots of investors do the same—but may also look at a wider variety of individual factors that are reliable. They may place a high value on factors such as the involvement of a celebrity investor (Warren Buffett is a top example), or the environmental impact that a company’s products can have if they succeed—solar panels, for example. Others place a lot of weight on favourable comments in the media.

True Blue Chips pay off

Learn everything you need to know in 'The Best Blue Chips for Canadian Investors' for FREE from The Successful Investor.

Canadian Blue Chip Stocks: Bank of Nova Scotia Stock, CP Rail Stock, CAE Inc. Stock and more.

The best stocks to buy right now should have more than one single factor that makes them attractive

Note that it’s a serious and potentially costly mistake to read too much into any single one (or small cluster) of them. It’s far better to look at the broad picture. For example, we try to figure out if the company is likely to do well in the immediate business environment, how it might react to a business setback, and how likely it is to prosper in the years and decades ahead.

How to find and invest in the best stocks to buy right now

To practice the Successful Investor approach, you need to get acquainted with, and invest in, a number of well-established stocks with a history of earnings and, in most cases, dividends. You choose your yearly purchases from this list, based on their fundamental appeal.

Some of your selections will seem particularly attractive in light of the value they offer considering their earnings and balance sheet information. Other selections will cost more in relation to these measures, but will make up for it with better growth potential. So, rather than aim for a value or growth focus in your portfolio, you’ll have some of each.

You also take care to downplay or avoid stocks that are in the broker/media limelight. Some stocks work their way into the limelight because they are profiting from an investment fad. Some get there through stock promotion.

Some stocks in the limelight are good businesses that deserve attention. But the limelight blows their appeal out of proportion. This builds up investor expectations for these stocks, often to unsustainable levels. Some limelight stocks live up to these heightened expectations, or even exceed them. But most limelight stocks eventually stumble. When the inevitable disappointments emerge, stock price downturns can be sudden and brutal. Some are permanent. That’s why these stocks should make up at most a modest part of your Successful Investor portfolio.

This is how we invest for our clients, to the extent that this is possible for each client, in light of their temperament and circumstances. Instead of worrying about how much to invest or when to buy, we invest each client’s funds as soon as they become available. Rather than depend on predictions, we focus on investment quality, plus portfolio balance and diversification.

That’s where we can create the most value, so that’s where we spend most of our time and effort.

Focus on diversifying when you look for the best stocks to buy right now

No matter what kind of stocks you invest in, you should take care to spread your money out across most if not all of the five main economic sectors: Finance, Utilities, Consumer, Resources & Commodities, and Manufacturing & Industry.

By diversifying across most if not all of the five sectors, you avoid overloading yourself with stocks that are about to slump simply because of industry conditions or investor fashion.

The best stocks to buy right now will have hidden assets, so look closely

The best time to find hidden assets is when they’re still hidden, long before the company begins taking steps to profit from them. Understanding and seeking out hidden assets while you’re evaluating a stock can add enormously to your profits in the course of an investing career. But you need the patience to profit from them because they can stay hidden for a long time after you buy.

Hidden assets can also cut your risk. Stocks with hidden assets are likely to hold up better than those whose assets are easier to spot since they are the last stocks that experienced, successful investors sell. When times are good, on the other hand, stocks with hidden assets tend to do better than average. Good times give them opportunities to put their hidden assets to work.

From your perspective, what qualities do you always need to see when you’re looking for the best stocks to buy?

There are a lot of personal factors that go into deciding which are the best stocks for your portfolio. What is most important to you in picking new stocks?


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