Before starting the search, it is important to know exactly what your preferences are. It will largely depend on the investor’s risk aversion what kind of stocks he/she will pick. If you have holdings comprised of various assets, check how the added stocks will affect its riskiness and the return of the overall portfolio. In addition to this, an investor has to have an idea on how long he/she will hold on to these stocks. Depending on whether they will be sold in a few months or kept for years, different stocks might be more attractive to the investor. One way to think about this is by looking at what your goals are. If you want to invest in stocks in order to keep your capital safe, then you might be less focused on growth and more on stability. On the other hand, if you want to rely on the capital gains you will likely look for stocks with a better growth potential. It is also important to know how diversified you want your portfolio to be. Many stocks experience growth cycles, and if your tolerance for risk is not very high, you will want to offset the changes in the prices of one stock by the changes in the other.
Many investors look at investing in stocks as a guessing game and try to find companies that haven’t been ‘discovered’ yet. Unfortunately, this doesn’t always end well. First of all, if a company has already had a public offering of its stock, it is unlikely that it is a small start-up that no one yet pays attention to. Secondly, there are large venture capitalists who are looking for such companies specifically and have a lot more resources to find them than small investors do. It is also very difficult for small investors to wait for news and press releases in order to forestall the market. According to the Efficient Market Hypothesis, all the information that is available on the market is already reflected in the prices. While this might be difficult to comprehend and there are some people who actively disagree with it, it is almost certainly true for small individual investors.