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How to Find Hot Stocks to Watch

Jul 14, 2008
The issue of how to find hot stocks to watch really is the million dollar question. While nobody has a magic formula for picking the hot stocks that will perform best, there are a few ways to go about tracking down hot stocks that have fairly good prospects.

Set your investing goals

Needless to say, chasing after hot stocks without a particular goal in mind isn't a very sound financial strategy. Before you start looking around for hot stocks to watch, think about what you hope do get out of it. Consider how much money you want to make, how much you can stand to lose and how much you really need to get started.

Pick an industry

If you already know a lot about an industry with great growth potential, you're in luck. In fact, you probably already have some ideas of which company's stock to buy. If don't know where to start, though, reading the business journals is the easiest way to pin-point industries that are picking up steam. Another approach is to list of few industries that at least mildly interest you and check into their growth potential. Sometimes, simply noticing which new products are increasingly popular can lead you to a hot stock.

Look for quality companies

While you definitely want to make sure any company you invest in has its financial house in order and no major problems brewing, that won't necessarily be enough to tell you its growth potential Look into companies currently leading their industries and to what they're doing right in terms of things like prices, quality, and customer service. Then look for similar companies that are just starting to emerge as winners.

Get advice

There's a lot of research and analysis that goes into finding companies with great potential. No one can do it all alone. That's why so many financial newspapers, magazines and newsletters publish lists of hot stocks to watch that even professional investors read. Track down one that best suits your investment goals and strategy and keep up with the stocks they pick. Just be careful where you get your advice. While getting stock tips from spam emails is obviously a bad idea, there's also some danger in listening to stock promotions. These promotions are really just advertisements and may exaggerate the potential of the stock.

Be aware of scams

Promotions are one thing, but some of the tips out there on hot stocks to watch are outright scams designed to prey on inexperienced investors looking for quick profits. Think twice about accepting and stock tips from someone who has any immediate gains to make if you buy and verify any claims made, even if those claims sound realistic. Also watch out for stocks traded OTC or by Pink Slips as these stocks usually can't meet the requirements most investors have.

Knowing where to look to find hot stocks to watch takes some experience, but by keeping tabs on growing industries and regularly reading the financial magazines and newsletters, you have a fairly good chance of finding a winner.
About the Author
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