Step # 2 Making a Stock Buy List

To make a stock buy list, narrow down your stock picks to not more than 10. Each of your stocks should be from different industries so you will have a diversified portfolio. Here is the screening process:

1. Identify the stock symbols for your publicly traded companies by using the web site called Public Company Search Engine at
   http://www.researchmag.com/cgi-bin/cosearch.exe.
   Simply type in the company's name such as Coca-Cola to get the symbol, KO.
2. Use the Internet at the Wall Street Journal Briefing Book web site, which contains summary information of company backgrounds, financial overviews, stock performances, company news, and press releases of over 7,000 companies to check the following criteria:
   
   • The stock price is above its 200-day moving average
   • The company's earnings and sales has been growing more than 15% annually in the past few years; thus, the earnings per share will double in about five years.
   • The P/E ratio is not higher than the growth rate
   • Return on equity is higher than 15%

   The address of the WSJ Briefing Book is http://interactive.wsj.com/edition/resources/documents/bbsearch.htm

   If you are new to the WSJBB, click here to learn more.
   The WSJ site is best viewed with Microsoft Internet Explorer.

   The Wall Street Journal Briefing Book, company web sites, and the like are essential tools for screening stocks according to the above financial criteria. You cannot rely solely on recommendations or on favorites or firsthand experiences in picking stocks. For example, you might have originally picked the stock of Apple Computer because you saw many people using Apples in school. However, when you check the financial performance of Apple in the Briefing Book, you will discover that it does not meet the selection criteria.

3. Visit the company web sites to make your final stock buy list. Recommended sites for finding company web pages are
   
   • InvestorWeb at http://www.investorweb.com/company.htm
   • NETworth Equities Center at http://networth.galt.com/www/home/equity/irr
   • Hoover's Online - http://www.hoovers.com/

   Bill Gates said, "Perhaps the most efficient way to find information about a company is by studying the company's site on the Internet's World Wide Web. Not every company has one but more and more do each day. In fact you can often learn more about a company on the Web than you would actually spending a day at the company."

   Company web sites provide more information about companies than does the Wall Street Journal Briefing Book. They provide the "story" of a company with its successes and setbacks, not just financial data.

Visit Investing For Kids for more background on Stock Analysis.