Definition: What are Stock Picks?
Stock picks are the stocks of companies that you have picked for potential investment.
The process of stock picking is synonymous to picking apples, oranges, used cars or any other item that you have to pay for – you press, smell, test drive and inspect before purchasing.
With stock picks, it’s the same.
Except that in order to pick stocks for investing in, you use methods other than pressing, smelling or handling.
How are Stocks Picked?
Stock picks are conducted using well defined analysis methods. Usually, analysts will start off with a list of several stocks (15 to 20…even more!) that might interest them.
Image Source: What are Stock Picks
Then, using techniques such as Fundamental Analysis, Technical Analysis, or a combination thereof, a short-list of stock picks is derived.
Using Stock Picks
It is important to realize that not all stock picks necessarily end up into an investor’s portfolio.
While the analysis may indicate that the short-listed stocks meet an investors investment criteria, he/she may end up investing in none of them, all of them, or just a few of them.
This happens when the stock picks are attractive, but investors are waiting for the right opportunity (time, price, and environment) to invest in them.
Some stock picks may end up on Watch Lists for future consideration.
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