Topic: Wealth Management

Stock research: 9 keys to investment success in all markets

The best way to profit in the stock market in times of volatility is to stick with the high-quality stocks we recommend. These stocks generally bounce back faster when the stock market rebounds. Here are nine key factors that we always take into account when we do the stock research to uncover high-quality investments.

Financial factors:

  • 5 to 10 year history of profit. Companies that make money regularly are safer than chronic or even occasional moneylosers.
  • 5 to 10 years of dividends. Companies can fake earnings, but dividends are cash outlays. Our stock research has proved time and again that if you only buy dividend-paying stocks, you’ll avoid most frauds.
  • Manageable debt. When bad times hit, debt-heavy companies go broke first.

Safety factors:

  • Industry prominence if not dominance. Major companies can influence legislation, industry trends and other business factors to suit themselves. Minor firms, on the other hand, have to take what’s there.
  • Geographical diversification. Canada-wide is good, multinational better. There’s extra risk in firms confined to one geographical area.

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  • Freedom to serve (all) shareholders. High-quality stock picks must be free of excess regulation, free of dependence on a single customer, and free from self-dealing insiders or parent companies.Our stock research never ignores these important factors.

Survival/growth factors:

  • Freedom from business cycles. Demand periodically dries up in “cyclical” businesses, such as resources and manufacturing. That’s why you need to diversify. Invest in utility, finance and consumer stocks, along with resources and manufacturers.
  • Ability to profit from secular trends: These trends outlast ordinary business booms and busts, because they reflect ongoing social change. Free trade and rising environmentalism are just two examples of secular trends.
  • Ownership of strong brand names and an impeccable reputation. Customers keep coming back to these businesses, and will try their new products.

Not all investments score perfectly on every oneof these factors. But the more you find when you do your stock research, the better.

As a member of TSI Network, you may have already seen Stock Market Investing Strategy: Pat McKeough’s Conservative Investing Guide for Making Money & Cutting Risk. If you haven’t yet read this free report, click here to download your copy today.

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