Our course on How to Buy Stocks goes through many of the fundamentals of researching stocks. How to find a new stock to research, what you want to evaluate in the stock, and where to find information about the stock and the company.

That is all preparation for actually choosing a stock to buy. In these two posts, I talk about what I look for in buying a stock for my portfolio. It’s a two part question, because there are two sides to consider.

First there’s the quality of the company that I am interested in: how likely will it grow in the future, how well does it perform, and how much control does it have over its destiny?

Then there’s the price of the stock: does it offer me an attractive valuation (on an absolute and relative basis), is there a favorable risk/reward, and do I understand why the valuation is attractive?

The last bit is understanding that not every company and stock will hit all the criteria, and deciding where on the spectrum we are comfortable with buying.

This is a personal list, and each investor will form their own over time, as they learn what works for them. The key to successful investing is to stick to a strategy, and to understand when it’s a good time to stick with a stock and when you have to cut your losses. Finding stocks that meet as many of these criteria as possible is my way of giving myself a chance at success.

The two posts on what I look for in buying a stock are:

• What I look for in a company
• What I look for in a stock