At this point you could be left with only a single investment prospect or a list of 10 or more companies. Perhaps, even after all the time you put into finding a stock, you decided that this industry is not right for you. This sort of decision is vital to the art of stock picking since your research has helped prevent a potentially sour investment.
Invest in stocks that offer an easy-to-understand, fairly straightforward company business model. Invest only in companies that are “best in breed.” This includes companies that have tremendously-established brands or that have extremely strong emerging brands. This is key. While the old investing axiom, “past results do not guarantee future performance” is true – and frequently repeated – it is also misleading. In order for a stock to meet the criteria of this investing strategy, it has to be a strong past performer. It doesn’t have to be up over the last year or even a couple of years, but the long-term chart has to be compelling. Invest in mid-cap and large-cap companies and try to avoid small-cap names. Try to focus on companies that pay out dividends. Again, this is not an edict. Ideally, you want to buy stocks that fit this framework either on significant market pullbacks or when the stock is breaking out from a large consolidation area or base.