There are many ways to pick up new stock ideas. Here's a summary of some approaches you may find useful.
Looking for new investment ideas can be daunting. Here's the lowdown on some approaches which may help you start the investment process.
1. Fund Manager Favourites
Why not copy the moves of the City's top-performing fund managers? I've written several articles for The Fool following this approach and I've found some interesting investment ideas along the way.
Electric vehicle company Tanfield
(LSE: TAN)
has been particularly successful. When I first wrote about the company a year ago, the shares were trading at 19.5p, now they've reached the dizzy heights of 42p!
So how did I find these shares?
I started at the Trustnet website. This will give you a list of the best performing unit trusts in any particular sector.
Then look at the portfolios of these top trusts. For many funds, you'll also be able to find a list of the ten largest holdings on the site. If there's nothing on Trustnet, you can probably find a top ten list on the fund manager's website. Or call up and ask for the fund's latest report on paper.
Another good site is Citywire. It gives you a list of the best performing managers, as opposed to the best performing funds.
2. Stock Screeners
Stock screeners enable you to look for shares that fit a particular investment style. You can create your own criteria to find your favourite stocks.
Perhaps you want a company with a price/earnings ratio of less than 6 and net cash on the balance sheet. Just type these criteria into the screener, and, hey presto, a list of companies should come up.
One well-known stock screener is Company Refs. It's available in book form, on CD, or on the web. Sadly, it's not cheap - £775 a year. Sharelock Holmes offers a similar service and is much cheaper -- £4.40 a month. However, it doesn't provide analyst forecasts, which is a very useful part of the Company Refs service.
That said, beware! Stock screeners have their limitations. Read this article for more on their drawbacks.
3. The Fool's discussion boards
Our discussion boards are a wonderful resource. Some of the posts are excellent, and many posters are happy to answer questions from beginners.
Here's a summary of the main investment-related boards. And here's a list of the most recommended posts within the last seven days. My favourite boards personally are Paulypilot's Pub and the Oil & Gas - Companies board.
You do need to be careful, though. Anyone who complies with the Fool's posting guidelines can post, so some posts are better than others. And surfing the boards can take up a lot of time. I know this from experience! It takes a while before you get a feel for which posters are worth reading carefully.
4. Champion Shares, The Motley Fool's online share-tipping service
Fool writer Maynard Paton recommends at least one share each month to Champion Shares readers. You can read more about the service or sign up now for a free 30-day trial. Maynard's next tip is published tomorrow.
Whichever approach you follow, good luck!
Ed is a former employee of Citywire and owns shares in the website's parent company.
An earlier version of this article was published in October 2005
