See the new Long-Term Leaders List, only at investors.com
THERE'S A NEW SWEET SPOT BETWEEN ACTIVE TRADING AND PASSIVE INVESTING.
What if you could make life-changing money by investing in stocks, but you didn’t have to spend time every day as an active trader?
IBD’s new approach makes this possible. We call these special stocks Long-Term Leaders : the kind of stocks you can buy and hold for years and make big profits. Think of this new strategy as a blend of 2 great investors: Warren Buffett and William O’Neil. It combines Buffett’s buy-and-hold, hands-off mentality with O’Neil’s CAN SLIM® approach to finding high-powered growth stocks.
It’s a great new strategy for busy investors who love the monster returns that growth stocks provide, but don’t have the time to watch and trade them actively. Let’s look at a case study of an IBD® Long-Term Leader.
Investors often think of Apple (AAPL) as the quintessential growth stock: big earnings and sales powered by innovative new products that change the world. And that shows on the chart above — since 2009, Apple has increased in value 1,584%, compared to 224% for the S&P 500 (the benchmark for one of the most popular passive investing equities, the SPY ETF).
However, look at one of IBD’s Long-Term Leaders, Domino’s Pizza (DPZ). In that same period of time, it’s up a staggering 5,279%. But how? Domino’s didn’t invent the modern smartphone. They did what Long-Term Leaders do: achieve consistent, steady growth with top-notch fundamentals.
To find a true Long-Term Leader, you have to combine both technical and fundamental analysis. On the technical analysis side, look at weekly and monthly charts and focus on the relative strength line. This will gauge a stock’s performance vs. the S&P 500 index, which is a key to long-term leadership.
Look for a rising RS line on weekly and monthly charts over a long timeframe — ideally, years. If the RS line is at or near a new high, that’s an especially bullish sign.
Pictured: A monthly chart for MSCI. Note how the relative strength line (in blue) has been rising strongly and reaching new highs ever since 2014.
On the fundamental analysis side, here are some traits to look for:
Very stable earnings: IBD’s Earnings Stability Rating goes from 1-99, where lower is better (more stable). Look for stocks with a rating under 10.
" The goal is to buy just once. Use small buys to add, and only after the original position shows a significant gain."
SO WHERE CAN YOU FIND LONG-TERM LEADERS?
We created the new IBD® Long-Term Leaders stock list based on feedback from investors. They liked the idea of a list to help less-active traders who were short on time but still wanted to profit from high-return growth stocks.
The Long-Term Leaders list is comprised of approximately 20 stocks that are hand selected by IBD’s market experts because they have many of the same characteristics of the best long-term leading stocks throughout history. The list functions like a model portfolio (similar to Leaderboard®), with each of the stocks representing a 5% position in the overall account. There’s also a watchlist of 20-30 stocks you should have on your radar, as they could be the next stocks added to the Long-Term Leaders list.
If you’re an IBD® Digital subscriber, you can see the list here or find it under the “Stock Lists” category of the navigation bar on investors.com.
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