Disclosure: Investor’s Business Daily has provided ValueWalk a free subscription to IBD Digital for this review.
Investor’s Business Daily has put together quite a strong collection of premium tools for investors who want to pick and trade their own stocks. Everything IBD offers pivots on one or both of two features: charts and lists. There is so much information to take in when you’re looking at IBD Digital that it becomes very easy to miss a lot, but when you take the time to really study all the extras on the website, you gain some insight into their methods.
Stock lists in IBD Digital
When it comes to finding future business champions, Warren Buffett and Charlie Munger have really excelled over the past seven decades. Q3 2021 hedge fund letters, conferences and more One could argue that these two individuals are some of the best growth investors of all time, thanks to their ability to spot companies like Coca-Cola Read More
When I first started using IBD Digital, I immediately dove into the stock lists and charts. At first, it wasn’t clear to me how IBD picks the stocks included on the lists, but it’s really all a matter of figuring out where they put this information. Most investors may not care much about the method behind the stock-picking, but I’ve always been intrigued with the “how” just as much of the “what” of things.
Investors who, like me, want more information on how IBD selects stocks for its lists, can find details under the “How to Invest” tab, which includes several lessons on investing and explanations for the methods IBD Digital uses in compiling stock lists. For example, you learn that the IBD 50 list is actually generated by a computer rather than by a team of humans picking stocks. IBD Digital also emphasizes that the stocks on this list aren’t necessarily ripe for the picking at the time they appear on the list. They may only be good for watching, with a plan for buying shares if they reach a buy point later.
IBD Digital also offers some explanations behind its specialty stock lists, which include Stocks on the Move, IPO Leaders, and IBD Big Cap 20. For the most part, IBD uses the CAN SLIM method to identify potentially winning stocks.
Reviewing IBD’s stock lists
Now that I have a better understanding of the method behind picking stocks for IBD Digital’s lists, I feel like I’m in a better position to review them more thoroughly. One thing I think it’s important to emphasize is that IBD seems to focus mostly on growth stocks, which means the lists aren’t entirely compatible with all investing methods. Investors who lean heavily on value or some other factors will want to be much more selective when it comes to the lists offered through IBD Digital.
However, even value investors can probably save research time by checking out IBD’s research and suggestions. The only problem we could see soon is when growth stocks fall out of favor, which could be starting to happen. It will be interesting to see what happens to IBD Digital’s stock lists when growth stocks are no longer hogging the limelight on Wall Street.
Every do-it-yourself investor has their own method when it comes to picking stocks, and the wide variety of stock lists offered through IBD Digital does speak to many different methods. On the other hand, digging through all of the stock lists can be a bit intimidating because of the sheer amount of information that’s included.
My favorite IBD Digital stock lists
Every IBD Digital subscriber probably has their own favorite stock lists on the platform, but I wanted to explain which of the lists I like the best and why. To get a good grasp of the basis of IBD Digital’s investing philosophy, it’s a good idea to check out the CAN SLIM SELECT. After taking the time to study this list and the explanation of the CAN SLIM investing method available on IBD’s website, I started to understand why they pick the stocks that they pick.
The IBD Big Cap 20 is also a good place to start when you’re getting to know IBD Digital. Since these are all big cap stocks, this list could be a good starting point for investors who are just getting started on their investing journey. It’s generally a good idea to keep a certain number of stocks as core holdings in your portfolio because they’re likely to grow steadily over the years.
One list that I don’t think gets enough attention is the one titled “Rising Profit Estimates.” Investors whose decisions are heavily earnings-driven will find this list to be of particular interest, especially when they’re looking for stocks that appear to have plenty of growth in the future, even if the strong growth hasn’t yet arrived.
Short-term investing mindset required
One other thing I think it’s important to point out when it comes to all of the stock lists on IBD Digital is the fact that all of them are assuming a short-term investing philosophy. The more you use IBD Digital, the more you understand the natural flow of buying and selling stocks. You buy or short a stock because of something you expect to see play out, whether it’s as basic as the company’s fundamentals or more complicated, like an expectation that the company will be acquired.
If you spend time really studying any one of IBD’s stock lists, you’ll start to understand the nuances of successful short-term trades, which can help you establish a foundation of knowledge regarding market signals and movements. If you want help building a shortlist of stocks using any of these signals, IBD Digital is a great place to start.
IBD Digital can be found here
Other products from Investors Business Daily include