How to Find New Stocks for Your Portfolio

Journalism often worries about favoritism in reporting. If a reporter owns shares in the company she is writing about, it might cause a bias. So the Motley Fool, like most financial media, requires its writers to disclose what stocks we own. That’s why, at the bottom of our articles, you will see a disclosure notice.

Here’s an interesting twist. The Motley Fool was founded by people who wanted to talk about the stocks that they bought. So from the very beginning, the Fool has encouraged its writers to invest in the stocks we are writing about. Many of us agree with author and investor Nassim Taleb that you want to pay attention to people who have skin in the game. So for me, the disclosure notice isn’t a negative to be worried about. It’s the opposite — the disclosure notice indicates how much a writer believes in what he is saying. You want to read articles by people who have put their money where their mouth is.

Image source: Getty Images.

So when I’m researching stocks to buy, I like to read articles by people who have bought or are buying the stocks. Also, I like to read articles by people who are successful and have made money through their research. I find a lot of stock ideas through reading articles. If I get to the bottom of the article and the author doesn’t own the stock, I often lose interest.

Find great investors and take a peek at their investments

Of course, if I’m generating new ideas, all I need is a stock name or a ticker. At the Motley Fool, every writer has a profile. So you can check out the writer’s profile and see all the stocks they own. I’ve been peeking at David Gardner’s portfolio for decades. And you can do this with any writer at Fool.com.

So, for instance, if I read a great article on Silvergate Capital (NYSE: SI), I’m happy because I own the stock and love it.

SI data by YCharts

I might follow up and click on the author’s name (Bram Berkowitz), check out his author’s page, and see all the headlines of his other articles. I’ll also click on his profile and see what stocks he owns. He owns Lending Club (NYSE: LC), a stock that had fallen off my radar. So I might read a bunch of articles about that company. It looks interesting, so I add the name to my watch list to keep tabs on it.

While most of my research is done at the Motley Fool, I also venture outside the Fool and find other successful investors taking interesting risks. I’m a big fan of Cathie Wood and her Ark Innovation fund. While I manage my own money, I like to peek at her fund holdings to get investment ideas.

I sometimes take a peek at a venture capital firm such as Arch Venture Partners and see what’s on the horizon in the biotech arena. That’s how I found Vir Bio (NASDAQ: VIR). I wrote an article about the stock back in 2019. I kept the name on a watchlist. And in 2022, the story got so good I had to buy shares.

CAPS is a great resource

At the Motley Fool, we have a free service that allows you to pick any stock that you think will outperform the market. So any time I’m bullish on a stock, I throw the ticker into CAPS. While we can’t add crypto to CAPS (yet), I use the software to track 50 of my family’s stocks, and 150 stocks that I want to keep an eye on.

You can also find top stock pickers in CAPS. So, for instance, Rex Moore is in the top 1% of CAPS investors. So are David Gardner and Joe Tenebruso. Once you know who is outperforming the market, you can use their picks to generate stock ideas. That’s how I found OptimizeRx (NASDAQ: OPRX) and Inari Medical (NASDAQ: NARI) via some of the top players in CAPS.

Often the top stock-pickers aren’t writers for the Fool. But they don’t have to be. Sometimes they will add a little commentary explaining why they are bullish. But the main thing is just the ticker of an interesting stock. Once you have that, you can start your research journey.

The next steps

After I have the ticker, I go to Yahoo Finance and look at the company’s “statistics” page. That’s a great snapshot of a company’s financials. I look at the market cap, revenue growth, profit margins, cash and debt levels, short interest, and various price ratios. If I’m still excited, I’ll go to the company’s website and look for an investor presentation. I’ll also look for the annual report (or S-1 if this is a recently public company) and a transcript of the most recent investor conference call. I’ll search YouTube with the chief executive officer’s name, looking for interviews or a speech at an industry conference. I’ll do a Google search of the company’s name along with “Motley Fool” to see if we’ve written anything on the company. And finally, I’ll look at some stock charts.

I love to see a stock that’s killed the market over the long term and is down sharply in the short term. I’ll want to solve the mystery of why the stock is down. If it’s because the overall market has slumped (as we’ve seen in 2022), that might be an attractive entry point. And that’s how I find new stocks for my portfolio.

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Taylor Carmichael owns Inari Medical, Inc., OptimizeRx Corporation, Silvergate Capital Corporation, and Vir Biotechnology Inc. The Motley Fool recommends Silvergate Capital Corporation. The Motley Fool has a disclosure policy.

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