What Stocks Should You Buy?

I remember when I was 19 years old, in between my freshman and sophomore years in university, and I decided I wanted to invest my money. Obviously, I sat down at a computer and typed out “what stocks should I buy?” Nothing useful came up, even though I didn’t understand why at the time. If you’re reading this post looking for stock recommendations, you won’t get any. However, you shouldn’t stop reading because of that. I’m going to explain how you can find what stocks you should buy.

Why a Google Search Won’t Work

If you do a quick google search of “what are good stocks to buy?” or anything like that, you might get some suggestions. However, just think about how many people are also searching up what stocks to buy. If all of you are looking at the same recommendations, you’re going to get burned in the long run by getting into some overvalued stock.

Buying stocks just based on another person’s recommendation is a bad idea. We always say on this blog that you shouldn’t invest in companies you don’t understand. Well, if you’re only buying a company because somebody on Reddit said it was a good buy, you’re completely in the dark. This means that you’re gambling. In that case, you might as well go to the casino.

General ‘recommended’ lists that are provided by some websites and blogs can be tricky. People who provide an in-depth analysis of companies can be useful. Seeing the way other people analyze stocks can help you understand what to look for. However, you’re not the only one looking at this list. In addition, there’s a good chance the list is outdated by the time you’ve found it. It’s always best to do your own analysis and research.

How to Find What Stocks to Buy Instead

So, what should you do instead? To find stocks to buy, you’re going to want to use your own analysis. I recommend using a stock screener to filter out stocks that don’t match your requirements. By using a stock screener, you’ll save yourself a lot of work.

Once you have a list of stocks from the stock screener, you can start analyzing the companies. I would recommend downloading our financial cheat sheet at the bottom of this page to know what to look for. You’re going to want to look at the income statement, balance sheet, and cash flow statement for sure. Likewise, I would recommend using Sedar to look at the audited financial statements and company press releases to see how stable the business is.

Finally, you can do a valuation of the companies whose financials look good. You can use the Graham Number as a starting point for this, although there are many other valuation methods.

Conclusion

Searching up what stocks to buy isn’t the best way of finding great companies to invest in. The results you’ll get will not provide good investment opportunities. Instead, use a stock screener, financial statements, and valuation methods to determine good companies. Make sure you learn about the company before you invest in it, as you don’t want to fall for value traps.

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