Stock tips are a dime a dozen in today's stock market. But the way they're handled often has a big impact on a performance.
Some might hear about a low-priced stock with a great story, and that's good enough. They buy the stock without doing any fundamental research and results are erratic at best. Another group hears about the same stock, but wants the idea validated by Investor's Business Daily.
The next step is go to IBD Stock Checkup at investors.com. Click the search box, found at the top right of the homepage, then enter a ticker. When the quote page comes up, click the blue checkmark just above the mini chart. The next page is a powerful research tool that tells you almost immediately if a stock has great potential.
The stock's Composite Rating appears at the top. On a scale of 1-99, with 99 the best, the rating looks at stock's fundamentals and price performance. To the right of that are the top five companies in the group, ranked by Composite Rating.
But the real research comes as you scroll down the page to the IBD Stock Checklist. Color-coded circles tell you where a stock ranks in terms of fundamentals. Green is top notch, yellow means mediocre, and poor gets noted in red.
Stock Market Checklist
The Checklist starts off with the Market Direction and Industry Group section. If the stock is a member of a leading industry group in the stock market, it will have a green circle.
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Below that, the Fundamental Performance section has three subsections. The Current Earnings section rates a stock based on a slew of factors, including how much earnings per share grew in the latest reported quarter, as well as average earnings growth over the past three quarters.
Annual Earnings also get consideration. That includes a stock's three-year earnings growth rate and how many consecutive years the company grew profits.
The Sales, Margin and ROE section looks at recent revenue growth, annual pretax margin and annual return on equity, respectively.
Further, the Technical Performance area rates a stock based on 12-month price performance. It also looks at supply-and-demand indicators like a stock's Accumulation/Distribution Rating. It also considers institutional ownership trends.
Top Marks For Vertiv
It's no surprise that Vertiv, an IBD 50 stock and member of the Leaderboard model portfolio, is highly rated with a strong Checklist. As of Thursday, the 16 variables in the Fundamental Performance section showed 14 green circles and just two red circles.
Also, among the 10 variables in the Technical Performance section, Vertiv was perfect with 10 green circles. Vertiv, a provider of cooling solutions for data centers, broke out powerfully from a cup-with-handle base Wednesday with a solid A/D Rating of B+.
Follow Ken Shreve on X @IBD_KShreve for more stock market analysis and insight.
