IBD
Investor’s Business Daily provides stock lists, investing data, stock market research and education based on the CANSLIM investing system developed its founder William J. O’Neil. IBD’s current location is listed as being in Los Angeles, California.
I initially subscribed to IBD many years ago after many of my friends and colleagues informed me that they all subscribed to IBD, and they were all happy with the service. IBD is one of two services I have subscribed to, and have been happy enough with the service to speak highly about their offering (the other being GorillaTrades).
First things first, IBD is one of the lower priced services available and does not require you to download any additional software to your computer in order to use the service. The cool thing that differentiates IBD from most other services is that you have the option to receive IBD in either print or digital form. Both versions cost about the same at approximately $30 a month, so it just depends on your personal preference. IBD also offers a 30 day free trial for you to test out the service before buying.
The only major flaw with IBD is that the site does not always recommend specific entry or exit points for the stocks they recommend. While some of the stocks they introduce to subscribers show potential points of entry such as “Back in buy range from $31.50 cup with handle entry”, there are no specific entry/exit points listed. So if you are looking for a stock recommendation service that clearly outlines specific entry and exit points, IBD is not what you are looking for. IBD also follows a lot of individual stocks which can definitely be hard to manage, and even overwhelming for a new investor. Although IBD does provide information on potential stock picks, I personally think of IBD as more of an additional source of information and use it as such. For instance, if there was a specific stock that I was personally interested in I may check to see what IBD’s opinion is, or if it has made it into their “IBD 50”. According to the website: “The IBD 50 is a list of 50 top-rated growth stocks in IBD’s database with top fundamentals showing strong relative price strength in the market.”
An example of a unique IBD offering is their list of the top performing stocks in each sector, with ratings on each individual stock based on 10 sets of criteria. In the print version, this section is called the “IBD smart NYSE + Nasdaq tables with 10 vital ratings.” These ratings are supposed to give you better insight into top ranked stocks in each individual sector, to get an idea of where IBD stands on that particular stock. The first rating is the IBD composite rating, which rates the stock on a scale of 1-99. The second rating is the EPS rating, which compares the stock’s last two quarters and three years EPS growth to all stocks. The third rating is the relative strength rating, which gives the stock’s relative price change in the last 12 months vs. all stocks. The fourth rating is the sales+ profit margins+ ROE rating, which combines recent sales, profit margins and return on equity. The fifth rating is the accumulation/distribution rating which uses IBD’s price and volume formula to show if the stock is under accumulation or distribution in the last 3 months. The sixth rating is the volume percent change rating, which shows the volume traded yesterday vs. average daily volume of the last 50 days. The seventh rating is the 52 week high rating, which shows if the stock’s closing price is within 10% of a new high. The eighth rating bolds stocks that are up one or more or new high, and underlines stocks that are down one or more or at a new low. The ninth rating is an arrow, which indicates that the stock has EPS and RS ratings of 80 or more and had their IPO in the last 15 years. The tenth rating is a small dot which means that IBD offers additional info on that stock online. As you can see, this could be considered a lot of information to a new investor trying to evaluate an individual stock, but it is useful information nonetheless.
One of the things IBD is most popular for is the “CANSLIM” system developed by William O’Neil, and this system is essentially the foundation of IBD’s investing system. “CANSLIM” is an acronym describing the seven traits Mr. O’Neil is said to have noticed before a stock makes huge price gains. The “C” stands for Current Quarterly Earnings, which looks for stocks with a quarterly earnings increase of at least 25%. The “A” stands for Annual Earnings Growth, which looks for stocks with a quarterly earnings increase of at least 25% for the past three years. The “N” stands for New Product, Service, Management, or Price High, which looks for companies with something new and potentially game changing to offer. The “S” stands for Supply and Demand, which looks for heavy volume accumulation by institutional investors. The “L” stands for Leader or Laggard, which looks for companies that are leaders within their respected industries. The “I” stands for Institutional Sponsorship, which looks for Institutional Sponsorship, which looks for positions with large institutional ownership. The “M” stands for Market Direction, which looks for stocks following the market’s trend. The CANSLIM system is well known by many seasoned investors as pretty much the guideline for investing. Since CANSLIM incorporates fundamentals as well as technical, it is used by many investors across the board.
I would personally recommend IBD to anyone looking to learn more about the stock market, or investing in general. IBD offers a broad scope of educational materials, including the “IBD University” which provides a lot of information on investing following the CANSLIM model. IBD also provides tons of daily information such as interesting articles on the overall market, as well as articles on individual sectors, industries, and equities, etc. Again, I personally use IBD as an additional source of information and will sometimes bounce my investment ideas off of IBD’s, to see what their opinion of the stock or strategy is. With that being said, if IBD did not concur with my opinion of a particular stock or strategy I would most likely not let that deter me from moving forward, but I would certainly take IBD’s opinion into account. IBD has a plethora of information on the overall market as well as individual equities such as stocks, ETFs, etc. which can be very useful, especially to new or potential investors looking to learn about the market. The “CANSLIM” strategy is also a very useful one and can give new investors a base of information to build on, which is very important. However, I would personally advise against using IBD as a sole investment strategy, given that the company does not typically provide specific entry/exit points on the stocks they recommend. But I would definitely recommend using IBD to supplement your investment strategy, or at the very least as a second source of information. So whether you are a novice investor or a seasoned investor just looking for an additional outlet of information, I would definitely suggest subscribing to IBD.