IBD’s Top 200 Composite Stocks

Every Thursday you can find the IBD's Top 200 Composite stocks listed in the making money section of the Investor's Business Daily. These 200 stocks are the top rated stocks ranked by the Smart Select Composite rating. Usually it returns the stocks ranked 96 or higher. Next to it, you'll also find the bottom 200. I don't ever review that as I usually go long in my stock investments. I suppose if you were going to short stocks that might be a place to look.

Recently, I wrote a post called Stock Trading Using The IBD 200 Composite list where I talked about how this list can be used to find good stock market investing ideas. I was fortunate enough to find Open Table, Inc (NASDAQ:Open) and watched it go up 21 percent in less than two months.

The strength of this list is the composite rating. It's a composite of earnings per share, relative price strength, accumulation/distribution, sales and profit margin and return on equity. These stocks tend to outperform the market.

Just because a stock appears on this list doesn't mean that it will go up however. While fundamentally, they are strong stocks, technically they might not be at proper buy points.

The key to implementing the CANSLIM strategy effectively is timing your buys when a stock breaks out above previous resistance. The buy point, or pivot point, is .10 above that point. I've found it's easy to identify stocks that fundamentally should go up. It's harder to learn how to buy the stock at the right time.

Here's what I do. I watch the list for price increases of more than 2 percent while the volume is more than 100 percent above it's average. Next, I look at the stocks trading volume and make sure that it's over 100,000 shares. After I look at all of the IBD ratings and make sure that they are over 80 and over A and B. The last step in the fundamental screening process is to look at the stocks earnings percentage change as well as the sales percentage change. I make sure they are over 25%. This gives me a smaller list to review.

It's at this point, that I start looking at the stock's chart and start looking at the past price and volume action. Later I will talk more about how I identify specific chart patterns. For now though, consider the IBD 200 a good place to start your search for potential winning stocks.