OK, let's say you've found a company with great sales growth, profit margins and return on equity. What's next? As good as these indicators may be, don't ignore other critical factors, such as a stock's earnings growth (the earnings lesson discusses how to evaluate earnings.), institutional sponsorship (The amount of buying by mutual funds and other institutional investors is important and is discussed in the sponsorship lesson) and relative price strength. (Relative Price Strength Rating takes a stock's price performance over the past 12 months and compares it to all other stocks. The rating is expressed on a scale of 1 to 99, with 99 being best. This is covered in the leaders lesson.) Also, studying a stock chart completes the stock selection picture. (Charts are explained in detail in the charts lesson.)

Related Resources:

Click here to get the 7 Steps For Selecting Winning Stocks, according to the CAN SLIMTM Investment Research Tool.

Go to the Investor's Corner Archives to read IBD's "editor picks" of classic Investor's Corner columns.

Search our archive of Ask Bill O'Neil Q & A's organized by topic.