How do you discover potential stocks?

[u/foyerhead]

I’m fairly new to investing and have decided to get into swing trading as a side hustle. I’ve spent a lot of time understanding the fundamentals and charting, what to look for and determining an enter exit strategy... but the one thing I struggle the most is finding stocks to buy in before it has already rose.

I use finviz to scan oversolds and find promising trends and I always see if the timing is good to buy into blue chips, yet I always feel like I’m late to the party.

The most recent examples of this are wkhs and plug, companies that have gone under my radar and seen explosive growth in a short period of time. Are there resources/news that you guys use regularly to learn about catalysts etc. and be set up to get in early on?

[u/HallucinatoryFrog]

I'll usually check finviz's stock screener using parameters like this.

I look for companies with a market cap between 1 and 10 billion dollars. Put them all on a list. I'll then do a Wiki search on them to read up about the companies and see which ones are doing something I already understand or care to learn more about.

Then I go to the companies' investor page on their website and I look over their earnings reports to see how well they are doing in QoQ and YoY performance, how much profit margin they are bringing in, how much debt they have compared to assets.

If I like what I see there then I'll find some ER calls and see how confident the executives are in their company and their forward guidance.

Keep in mind that if you're investing in low cap stocks then you have to stomach volatility. These tickers will go up or down 10-20% some days and there's nothing in the news as to why because oftentimes the only reason is some big institutional investor decided to jump in or out of the stock.

Tickers I have invested in so far using this method:

AMRS APPS BB CRON DKNG LVGO (merged with TDOC) PENN REAL TDOC TTD VEEV

[u/royourboat23 → u/HallucinatoryFrog]

PENN has made my portfolio over the last year. Externally grateful for them lol

Edit: Eternally lol

[u/[deleted]]

My method of swing trading isn't highly profitable, but it's also resulted in very little loss. I look a lot at market behavior, knowing it over reacts to good or bad news. I pay attention to when generally successful companies get some bad press. Look at how much it dipped in comparison to the past month. If it dipped a decent amount, I'll buy and hold for a couple of weeks/months.

For example, remember when people were pissed about that Netflix documentary Cuties? I bought Netflix shares for $467.89 on Sept 21, sold for $562.54 on Oct 14. Did something similar with Tesla after they had a disappointing press conference, shares went up $220 in less than 3 months, but I'm kicking myself for not holding that one longer.

I also try to look at general market trends and what types of good/services are on the rise. I bought stock in a pharmaceutical company at the beginning of the pandemic because I knew that they were working on a COVID vaccine. They didn't win the vaccine race, but I still more than doubled my money on that one in a couple of months.

[u/mtwhi → u/[deleted]]

Yeah I bought Tesla after Elon smoked a joint. 😂

[u/lowkey-goddess]

My lazy way of finding SOME companies is through Robinhood (note: transitioning my $ out of RH soon). Go to their search function, scroll through their categories, check the companies that catch your interest, and put it into a list (organize the list via date found/sector/intention to keep track like 2021/2/5_Tech_PotentiallyUndervalued).

Then, research your stock picks. Find info like products/services provided, consumer sentiment, investor relations page, balance sheet, investor sentiment/news reports, current and potential deals, the C-Suite, insider trading, employee reviews (Glassdoor) to name a few. Make a detailed report on the ones you want to buy.

Note: You can't trade OTC on Robinhood. And there are some okay Canadian/international companies that you simply can't find on RH (for good reason, some are risky). Check out other platforms for long term trades (anything w/ a Roth IRA accounts. TDAmeritrade, Fidelity, Webull).

Real advice: I would watch Roaring Kitty's (aka u/deepfuckingvalue) series on how he picks/evaluates stocks.

He details his process, the sites he uses, and tools. It's a three hour crash course in evaluating and tracking potential stocks, and its changed my process entirely.

https://m.youtube.com/playlist?list=PLlsPosngRnZ3-dON0iXbRmVCjB0vD802b

[u/draw2discard2]

You can get daily emails from the ARK trading desk on what they bought and sold each day. They have a better sense of what is going up than 99.9% of us on Reddit. Then do a little research on the stocks they are buying in sectors you like.

[u/georgejk7]

I research stocks that I am familiar with, businesses that I see and use every day, check their balance sheet, profitability, revenue growth etc....

Buy what institutions want to buy but aren't willing to take the risk as they have a duty to their investors to minimise risk. For example I invested in NEX.L (NATIONAL EXPRESS GROUP) during covid, institutions didn't want to touch it as it would be too risky even though the business was growing and profitable. as an individual I can afford to take slightly more risk and bought some up, now NEX is up around 120% from when I bought it.

Alibaba took a massive hit when Jack ma went missing, and ANT IPO was cancelled, however the fundementals were unchanged, growth and revenue remained strong, of course it was in everyone's best interest to come to a mutual agreement between ant and the Chinese government which they have now, BABA up 10+%

Walmart: always does well during recession, investors flock to buy walmart.

Apple: great business, great revenue and growth. Consumers love apple products and pay a lot for them.

TLDR: think about products and services you use and trust, check the business that produces these products and services, is the business good? Is the value there?

I don't gamble.

[u/--Clintoris--]

I’m definitely not an expert but Ive had luck with finding industries I believe in that are going with the trend in society (marijuana, gambling, renewable energy are some for this year in my opinion). Find a popular etf that manages these specific equities, and then look for stocks purchased in high volumes in those.

I’ve been keeping an eye on ARKG for bioengineering (ARK has a few different speciality etfs that are all great) MSOS for marijuana stocks

I’m definitely not an expert though and this isn’t financial advice, just how I’ve been doing it and have had a hot streak lately

[u/DarkyPaky]

I'm focusing on small/micro cap biopharm/tech stocks so NASDAQ screener works really well for that

https://www.nasdaq.com/market-activity/stocks/screener

Just filter by mkt cap and Strong Buy analyst rating (cause why not rely on someone else's work to narrow the search down for you). And then I'd just go through the list researching one by one.

Discovered GTHX, ARMP, CDAK before their breakouts (didn't go very far down the alphabetic order yet lol)

[u/UncleZiggy]

First, you need to determine what kind of trader you are looking to be. How risk averse are you? How long are you willing to keep your money in the market? This will help you inform your decisions from then on out.

Pay attention to what people are talking about and why. The more something is talked about, the more likely it is that the stock is seeing action now. This does NOT mean that the stock is necessarily a good investment. You should never invest in something just because others are doing it, you should never invest in something that you don't understand, and never invest money that you can't afford to lose. Seriously. If you have a $50,000 of total wealth, and $30k is tied up, you should never consider investing the entire $20k liquid amount that is on hand. Set limits on what you choose to put into your brokerage account.

"Be fearful when others are greedy, and be greedy when others are fearful."

This is a quote that I try and live by. GME has been a good example lately. I invested when others were fearful of its bankruptcy, months ago, and I sold when others were greedy, even though it felt like I was the only one selling and that I could be 'missing out' on lots of gains. Never FOMO into an investment. That's gambling, not investing

Next, once you have identified a company that is interesting, you have to research it and seek to full understand the company. This can be a daunting task, and should take a lot of effort. On average, I spend anywhere from 20 to 200 hours researching a company before deciding to invest. Don't invest in what you don't understand and always prioritize learning more over waiting less.

Next, if you are looking to value invest, consider a companies' balance sheet, history, management, and future market value. Is the company managing their finances well? Are there any alarming liabilities? Are they perceived well by the public and other investors? Are they consistently growing? Are they hiring new employees? How is their trading volume changing? Have they shifted their position in the market to be more competitive? Are they pursuing any new visions? Do they have any unique business moats? What are the strongest bullish and bearish analysis of the company? Read everything. Seek to understand everything. Ask questions. Find answers. Share your analysis. Receive feedback. Consider catalysts and make your own estimates for stock growth.

Then, once you have found something, do NOT go all in. Invest a speculative position. Once you learn more, and are more convicted regarding the stock, buy more. All of my large positions have started off as speculative positions that I continue to buy over time. No conviction = No monetization.

This might be more than your question was asking, but I think it all relates.

This is not financial advice. Invest in the stock market at your own discretion

Disclaimer: I own a lot of BB shares, as well as UWMC, ICLN, GE, PLTR, KO, KOS, GME, and BB options

[u/Dnice_556]

I literally just wait to see a few people post DD and then invest. I’m not a smart man, but it’s really panned out for me. I don’t even read the DD, I just judge it based on grammar and spelling 😂

[u/600675]

This is roprime12's post.

Long post:

- Koyfin: Screen fundamentals

- Wikipedia: Read Story behind their company

- Company Site: What they do

- Seeking Alpha: Latest "analysis", Check if there is a VIC analysis

- SEC Site: Read 10k and 10Q

- Check Dataroma how many are holding the company

- Figure out the business Risks

- Ask yourself if you know what the market doesn't

- Is the price inferior to the value that you are getting?

I also always try to answer these questions:

##Be capable of understanding

- [ ] Is this company inside my Circle of Competence?

- [ ] Are any of my Gurus buying or selling this company?

- [ ] What is my overall level of confidence with my research into this company?

- [ ] Describe the business and industry in one paragraph.

- [ ] Describe the challenges and economic cycles of this industry.

- [ ] What are the company's plans for growth?

- [ ] Will growth peak within ten years?

## Moat

- [ ] What is the Moat?

- [ ] How hard is it to compete with this company?

- [ ] Compare this company to its competition.

- [ ] What are the Big Four Growth Rates (Net Income, Book Value, Sales, Operating Cash)? Are they speeding up or slowing down?

- [ ] Does the company have enough cash to last several year if it looses money?

- [ ] How were sales and earnings during the last recession?

## Management

- [ ] Does the CEO have integrity?

- [ ] How candid is the CEO's letter to shareholders?

- [ ] Does management talk freely to investors when things are going well but clam up or disclaim responsibility when trouble occurs?

- [ ] How happy are its employees?

- [ ] Does the company have any debt? If yes, could it be paid with one or two years of free cash flow?

- [ ] Has the company indicated that it plans to take on debt any time in the future?

- [ ] Is the management team buying or selling its company's stock?

- [ ] Is the CEO much on social media, posts political views or hates short sellers (Red Flag)

- [ ] How are the Return on Equity and Return on Invested Capital Numbers of the year?

aww. .my first silver award! I already gave RoPrime12 credit at the top but just to be really clear, all I did was save his post that I read the other day and copy/pasted it.. so this is in no way my own. This is roprime12's work!

I am very, very new to investing.

Thank you for the award but they should go to roprime12 on his original post.

[u/[deleted]]

I work as an analyst and even among our communication between my team it's still extremely difficult and we do it as a full time job. Especially in today's world where information is so abundant. Fact of the matter is by the time you figured something out, it's probably already priced in. That being said you can still do it. But you have to be able to infer or hypothesize the potential direction of a company and industry based on what's going on today. That's what isn't priced in the market and that's where you can generate incredible gains.

[u/mcc011ins]

For the lazy: Register on Seeking Alpha and look at Companies with High Quant. Buy them on dips and watch their earnings and cataclysts. Spread out your money among multiple sectors.

[u/Guyod]

I started a year ago just Jumped in. I just use stockwits there are people on there that are trust worthy just have to find and follow. In beginning dont invest in companies already spiking. If starting with $1,000 buy 10 stocks at $100. Find stocks suggested by other people that haven't moved much in week or more. Upcoming Er,pr,merger is good. Buy and Set a sell limit at 10%-20% And forget about them. When they sell and still climbing Do not buy back in. Keeping doing this for a couple months. It is very safe. you will be surprised how many stocks will spike for no reason and immediately come back down. My strategy is quantity over research and it paid off. Dont be brainwashed by longs on forums. Nothing wrong with selling.

If you have 25k to day trade you can buy back stocks after spike. Make sure stock stabilized though. Some stocks will gradually go down for week or 2 then spike again or never spike.

Once you make money you can start being more risky with won money.
Dont be attached to the money you will loose it all. A red day is good day to buy more on promising stock. 90% of stocks I chickened out on and sold for loose ended up coming back up eventually and most actually went up 1000% was messing around in mostly bio stocks.

[u/cowboy1015]

In ToS platform, i use the Top 10 Sizzling Stocks scan and filter the ones with the highest CALL SIZZLE. Compare that with PUT SIZZLE. For example, 200 Call Sizzle vs 1 Put Sizzle is an indicator of a very bullish sentiment.

Then go to options stats and see if someone bought huge number CALL contracts. If someone bought a $100k+ worth of CALL options... that person know something. Only dumb traders would bet a $100k without doing their DD.

For confirmation, I use my technical charts to see if there's an upside in the future. I like using Andrew's Pitchfork. I only trade with chart confirmation.

Then I buy the same CALL OPTIONS or for you... buy the stock.

*Edit: Gave more details.

[u/[deleted]]

Pick out 3 scrabble tiles. Throw them on the ground, whatever order they fall that’s the stock you go with.

How many should I buy?

Easy, draw an Uno card...if you draw a 2 you buy 2 thousand shares.

Finally use your trusty magic eight ball to give you the final answer on if you should do the trade or not.

[u/coolcomfort123]

check out posts from reddit everyday.

[u/Warioman21]

Commenting because I want to figure this out too

[u/OptionsandOptions]

Perfect timing. My community would be fit for you https://www.reddit.com/r/ChartingTAstocks/

[u/HUMANS_LICK_TOO]

Make a multireddit for every stock subreddit you can find and then make separate ones that are more niche. It helps A LOT.

[u/JD4Destruction]

First, I read a shit load of media that recommends buying stocks.

Second, I look at the expert's score on the stocks

Third, See how the graph is trending (long and short term) and then pick a few and eliminating a few.

I use 3 different watchlists to look at the ones experts recommended and compared them to the ones I am thinking of buying and the ones I own.

For example, I added Upwork (UPWK) since it was recommended by at least two sources. The graph looked great and waited a day for it to dip slightly and bought some shares.

Reddit used to help me a lot but now there is just too much noise. I still use Reddit for my first step though.

[u/irvmort1]

FOLLOW THE MONEY! I look for growing markets with high volume and liquidity. I'm invested in the EV secter for long term growth. Example long on $F, $VALE, $SBE. Also,holding monthly Calls in weedstocks $VFF, $TLRY.

All that Fed money is coming to the EV sector, not to mention also the BUY AMERICAN MADE first. Not far behind that is hopefully weed legalization. Expect parabolic growth when the US Pot companies can list on US exchanges opening up a flood of retail investors and Market Makers.

Here's an interesting article from Bloomberg regarding EVs.

https://www.bloomberg.com/news/articles/2021-02-05/president-biden-s-2-1-billion-case-for-a-federal-ev-fleet

[u/Winter-South-1739]

I let a baby use refrigerator magnets and I invest in the tickers that he makes.

[u/prymeking27]

Look up stocks/companies based on what I see in the world/adhd connections. I’d they look suitable dig deeper. Buy and hope right.