Page 720 - How to Make Money in Stocks Trilogy

24 HOW TO MAKE MONEY IN STOCKS SUCCESS STORIES

ranked based on superior earnings, strong price performance, and leader-
ship within their respective industries.

Stephen Cole
Stephen is a busy lawyer and an IBD Meetup leader in Sacramento,
California. His weekend routine includes going through the IBD 50. He
looks for stocks that are in first or second stage bases, with accelerating
earnings 25% or greater, and a return on equity of at least 17%. (Return on
equity measures how efficient a company is with its money.) Stephen builds
a watch list by looking at the mini chart and the description below each one
that describes a potential buy point. He sets an alert in his brokerage
account that lets him know if a stock is nearing that price.
Stephen bought Transdigm Group in April and had gains of 14% through
the end of September 2012.

• KEY POINTS •

• Look for stocks in the IBD 50 that are in first or second
stage bases.
• Stocks should have quarterly earnings of 25% or greater.
• Return on equity should be at least 17%.

• The description below the IBD 50 mini chart will help
identify a potential buy point.

Stuart Auvian
Stuart is the Meetup leader for the Marin County IBD group located in
Northern California. He emphasizes to his group the importance of buying
at least one stock when the market issues a follow-through day. “This puts
you in the right place psychologically because you’re in the game, rather
than trying to play catch-up if you get into the market late after a follow-
through day,” he says. To build his watch list, Stuart pulls four or five stocks
from the IBD 50 that have top fundamentals. Stuart was successful with
Alexion Pharmaceuticals, which had earnings growth of 48% and sales
growth of 44%. Stuart bought the stock in December 2011 and sold on
March 12 for a 20% gain.