Searching around for investments when you have cash burning a hole in your pocket is a little like going to the grocery store when you’re hungry – not a good idea. I keep a watch list of stocks. Then, when I have some money to invest, I find a good candidate from among the stocks in my watch list and pick up a few shares. As I’ve said in the past, about five years ago I changed my previous way of investing, which involved buying several different stocks that I thought would do well for various reasons and then selling if they increased by about $10 per share, and changed to what I’m terming serious investing. In this new way of investing I buy stocks that I think will do well over long periods of time and then plan to hold them for several years to decades. I plan to hold through the ups and downs in the economy, so long as the businesses I select continue to be well run, because I’ve found that good companies just emerge from downturns stronger since their competitors go out of business.
I also tend to buy in larger amounts – 500 to 1000 share positions instead of the typical 100 or 200 share positions I would buy in the past. This means that when I select well, I can make a huge profit that will really affect my life instead of just a minor profit that is nice to have but doesn’t compare to my work income. Note that while I do concntrate in some individual stocks, I don’t put all of my money into individual stocks. I already have mutual funds in my 401K account from work, and I also diversify into some mutual funds in my IRA and even my taxable account as the size of the portfolio grows. But for the portion of my portfolio I’ve chosen to have invested in individual stocks, I tend to concentrate a lot more than I did in the past because that gives me the chance to significantly outperform the mutual funds and the indexes. If I were just starting out and had a small portfolio, I would also start with individual stocks while I had little money and a long time to invest – while still squirreling money away into mutual funds in my 401k – and then shift over to more and more mutual funds as my portfolio got large enough to protect.
So what stocks have I selected for my watch list right now? I’ll list them at the bottom of this post, but first a word of caution: Just because a stock is on my watch list doesn’t mean it is something someone else should buy right now. When I’m ready to invest, I’ll review my watch list and decide which stocks look good now and which have already had a recent run-up and look pricey. If you want to start with my watch list as a starting point and then make your selections from the list, that would be fine (although note these are just my selections, which may be totally inappropriate for you and your situation – use at your own risk).
Here is my current watch list:
IT/Technology: (I’m not big on IT and tech companies because their earnings tend to be all over the place, but here are a few that have shown consistent growth.)
*Cognizant Technologies
SEI Investments
*Fiserv
Venture Capital: (I usually see venture capital and hedge funds as great for the people running them but bad for the investors and shareholders who buy into them. This one has been different, however, at least so far. This one can make your taxes complicated because it is a partnership, however, so talk to an accountant before getting involved.)
*Blackstone Group
Retail: (I love retail because the company can grow just by adding more stores. I’ve had Home Depot for a long, long time and it may be too pricey now, but it has had a great history. The Container Store is just a new company with lots of room to grow that may not pan out over the long-term. Walgreens is just really well run.)
*Chico FAS
*The Container Store
*Dicks Sporting Goods
*Walgreens Boots Alliance
*Home Depot
Restaurants: (I love restaurants for the same reason I love retail – you grow by adding restaurants and franchises. The danger is that tastes can change really fast – I found this out from Ruby Tuesdays. BJ’s is my favorite stock right now on a long term basis, but pricey after the recent run-up from $30 to $50 this year.)
*Texas Roadhouse
*BJ’s Restaurants, Inc
*Sonic
Other: (AFLAC and Rollins have been long-term holdings that have served me well. American Towers used to be a cell phone tower company, now a REIT made up of cell phone towers. Greenbrier makes railway cars and does well both when oil goes up or business activity picks up because oil prices are down. LKQ is fairly risky, but has some potential.)
*AFLAC
*American Tower
*Norwegian Cruise Lines
*Rollins
*Greenbrier
*LKQ Corp
* indicates that this is a stock in which I have a current position of some amount. I doubt I’ll make any money from my limited readership buying into any of these companies since I doubt the markets would notice, but wanted to be up front with everyone.
Have some Serious Investing picks of your own? Got something to say? Have a question? Please leave a comment or contact me at [email protected].
Disclaimer: This blog is not meant to give financial planning advice, it gives information on a specific investment strategy and picking stocks. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.
