Explosive stock growth doesn't happen in a vacuum. Usually, new products, new services, new management or new industry conditions propel stocks to new heights. In its study of the greatest stock market winners, IBD discovered that more than 95% of the successes in American industry met at least one of the above criteria. And, contrary to the beliefs of many investors, stocks that make the biggest price advances start their moves when they are already at or near new price highs. By following the old adage, "buy low, sell high" investors would have missed out on most of the biggest stock successes in market history.

Winning Characteristics

• A stock that makes big gains often results from new products or services. But be wary of unproven products, especially if the company management doesn't have a solid track record.
• Superior management is essential to a company's success. That's why often a shakeup at the top pushes a stock's price higher.
• Quality stocks making new price highs just as they emerge from sound chart bases on higher volume are often likely to continue climbing, while stocks making new lows are probably headed even lower. Therefore, focus on the new price highs list for the best potential opportunities.
• You can think of a stock's price as a measure of its quality and, consequently, its potential. Typically, stocks higher in price reflect higher quality.
• Always be on the lookout for new products, new services, new management, or major improvements in industry condition.

How to Identify Companies with Positive New Conditions

• "The New America," found daily in IBD, features companies with enterprising products or services and good fundamentals, often before they are widely known. These are companies that exhibit the characteristics found among the market's biggest leaders of the past.
• IBD publishes a daily list of stocks making 52-Week Highs. These new highs are categorized by sector to more easily identify potential market leadership.
• IBD's main stock tables show each stock's 52-week high. And stocks making new highs or up at least $1 for the day are boldfaced to help quickly identify strength.
• The "Internet & Technology" pages in IBD regularly profile high-tech companies developing innovative products. A team of Investor's Business Daily reporters and editors in the heart of Silicon Valley covers this field. The section includes interviews with top executives of leading technology companies.
• IBD's Industry Groups page features Groups With Highest % Of Stocks Making New Highs to help identify market leadership, as represented by new highs.
• A good way to keep up with changes in corporate boardrooms is Investor's Business Daily's "To The Point" section. This is a one-page news summary, packed with dozens of developments at U.S. companies, including reports on leadership changes at major businesses.