The biggest problem that new stock investors face is not knowing which specific stocks to buy.
Part of the problem is that new investors do not know that their broker probably has recommendations on what stocks to purchase. If you have this problem, then this article is made for you.
This article will guide you to the Easiest way on picking stocks for your investments, using your broker’s research and analysis. This is actually Level 2 of stock investing that we talk about in The Different Levels Of Stock Investing. I highly recommend you read that as well.
We’ll be using COL financial as our examples since they are our broker. They’re probably your broker too, but if not, your broker should still have the information we present here.
Also, if your broker truly does not have research and recommendations for you, then you should consider changing brokers or looking for these information somewhere else.
NOTE: As always, any mentioned stocks are just examples. They are not our recommendations.
Before Everything Else
So, this article (and all of our investment tutorials) are actually for long-term investors.
If you’re not sure what it means to be a long-term investor, don’t worry as we got you covered.
Previously, we made an article that talks about the basic strategy called the Basic 6 Part Strategy To Be A Pro Stock Investor. Read, understand and apply those together with the lessons here and you’ll be a pro long-term investor!
But anyway, let’s proceed to the main topic of picking stocks using broker recommendations.
Super Easy With Few Options: Check COL Financial’s Facebook Page
It’s probably to entice more customers to use their platform, but for whatever reason, COL Financial actually posts about what companies they recommend.
Essentially, you’ll look at these recommendations before you buy stocks.
…and that’s mostly it. Easy, right? It’s also not confusing since you have limited options.
Here you can see that COL recommends a total of 10 stocks from 5 different sectors (or industries).
If you read the article about the strategy of being a pro investor that we mentioned above, you know you’ll have to diversify.
Part of diversifying means buying multiple stocks instead of just one stocks. Diversifying also means buying stocks from different sectors.
If you buy multiple stocks, say ALI, MEG and RLC, then you are actually NOT properly diversified because all of those are part of the same sector. You should be invested, or plan to be invested in at least 3 sectors.
What sectors makes the best investments? Which sector makes bad investments? We’ll talk about that at a later part of this article.
But also, we’ll be making another article that explains the different industries and what makes them good and/or bad.
Make sure to follow us on Facebook or Twitter to get updated when we post new articles. Or just check this website, www.bakufinance.com, every few days for a new article about proper personal finance and responsible investing.
Also Easy But With More Options: COL Financial’s Investment Guide
While the COL recommendations in their Facebook posts are good and all, they are a bit limited. That goes for both in number of stocks and the information on each stock.
If you would rather have more options on what stocks to buy, COL Financial still have you covered with their investment guide as seen below
I know, I know. You probably feel like it looks intimidating, right? Well, it doesn’t have to be.
Don’t worry about the huge amounts of info available as you only really need to look at a few stuffs here.
First off, you have to look at the “COL Rating”. Stocks that have the rating BUY are the stocks that COL recommends you to purchase for investments. Obviously, this means you are only going to select those stocks that have the BUY rating. Simple, isn’t it?
The only other info you need to look at for now is the “Buy Below”. This is simply the maximum price that you should buy the stock.
So, for example, using the information presented, you should not be buying BDO (Banco De Oro) stocks as it does not have a BUY rating. So just ignore that.
You can buy BPI (Bank of the Philippine Islands) stocks if you choose since it has the BUY rating. However, make sure that you are buying it for only P92 per stock, or below. If it hits P93 per share, then perhaps you should buy something else.
As we have taught in the previous articles, you should never buy if it becomes to expensive compared to its value. So always buy at the “Buy Below” price, or at a lower price than that. The lower the better.
Things To Note About COL Investment Guide
First off, do not rely on the “Price” information listed on this document as it is not updated. Always base your decisions on the current price.
Secondly, this article is all about EASILY choosing a stock, which means utilizing only the COL Rating and Buy Below information.
We do plan on making a separate tutorial to use the other information presented such as the COL FV, P/E, P/BV and Div Yield. Using this information makes your stock picks much more superior in a lot of ways, but it also makes it more complicated. This is why we choose not to discuss those here since this article is about easy stock picks!
If you want a more complex but superior way to choose stocks, then watch out for our next article that covers these items. Please don’t forget to like and follow us on Facebook and Twitter to get updated when those new articles are published.
Lastly, please note that COL Financial’s stock picks are not perfect. But if you are not a financial analyst, your broker’s recommendations are your best alternative in making sure you are buying good stocks at a good price.
What Industries Make Good Investments
A recurring characteristic when it comes to good industries is that people and businesses need them.
Take note that these industries are just our top picks. There are other good industries, but these are the better ones that we can confidently recommend.
One good sector is the food industry. Food is a very basic need, and the costs to make it is pretty low, so a lot of big companies earn really well in the food industry.
Example food companies (and their products) include:
- JFC (Jollibee, Greenwich, Chowking)
- SM Food and Beverage (San Miguel brand alcohols, Purefoods, Magnolia)
- URC (Jack n Jill, C2, Nissin)
- And a few more
Another good sector is the banking industry. Banks make a lot of money by letting both individuals and businesses borrow money in exchange for interest. Banks also earn from investing in other ways. The costs to operate banks are also really low as they don’t require any big, expensive equipment’s.
Examples of bank stocks are:
- MBT (Metrobank)
- BDO (Banco de Oro)
- BPI (Bank of the Philippine Islands)
- SECB (Security Bank)
- PNB (Philippine National Bank)
- And a few more
Property companies, as long as they are well managed, also do really well. Businesses need a place for their workers, and the workers need a place to live.
Example property stocks:
- SMPH (SM Prime Holdings)
- ALI (Ayala Land)
- VLL (Vista Land)
- FLI (Filinvest Land)
- And a few others
Lastly, power/electricity related companies also tend to do well. Any household or business need the products they offer.
Example stocks are:
- MER (Manila Electric Company/Meralco)
- FGEN (First Gen)
- AP (Aboitiz Power)
- And some other
What Industries Make Bad Investments
There are industries that it’s best to just avoid, especially for the everyday investor. And most especially for new investors.
These industries are:
Of course, some companies in these industries could probably do well. But if you’re new and/or you’re not that well versed in business, you’ll be better off avoiding these.
In a future article, we will be explaining why these are terrible industries as investments.
Reminder: Just Because COL Recommends It Does Not Mean Its Already Good
I just want to reiterate that just because your broker recommends a certain stock, that does not mean you will blindly follow them and buy it. Sometimes, broker recommends stocks that good investors should NOT buy.
For example, there are times when COL recommends airlines stocks and mining stocks. Again, we recommend you don’t invest in those.
Why would COL recommend those? Well, there are many different reasons. And honestly, these *could* be good recommendations, as we have stated. However, for the purpose of staying safe in investing over the long-term, we suggest you avoid those kinds of stocks we mentioned in the industries to avoid, even when it is recommended by your broker.
Look through their guide because they are from COL’s financial analysts, but don’t just follow it blindly. Take note of companies that you should probably never invest in!
You Now Know Enough To Start Buying Stock Investments
This article and all the other articles we mentioned is essentially all you need to know to start buying good stocks. So if you’ve read all these and understand them, you’re more than ready to start investing in the stock market.
There are more things to learn, however, but they are more or less optional. Of course, it would be best for you to learn as much as you can. Being well informed is always best, so keep on learning!
Good luck we hope you learned something!