The Little Book of Picking Top Stocks: How to Spot Hidden Gems

How well does it pay to own the Standard & Poors 500 Indexs best-performing stock of the year? Over the 2012-2021 period, the one-year total return ranged from 80% to 743%. This book identifies the quantitative and qualitative traits of stocks that made it to #1 and tells the stories of how they got there. A key indicator, the Fridson-Lee Statistic, makes its debut in these pages.

Aiming for the massive upside of the #1 stocks entails substantial risk. Its not something to do with more than a small percentage of your portfolio. But attempting to pick the coming years top performer can provide an outlet for speculative impulses that might otherwise spoil a prudent, long-term investment plan. And by investigating the statistically determined best candidates for #1, youll gain important insights into stock selection.

The Little Book of Picking Top Stocks explains why conventional equity research provides only limited help in zeroing in on the indexs future top performer. Spotting the #1 stock isnt Wall Street analysts focus, although the information they furnish about companies competitive strategies is quite helpful. Problematically, investment banks fundamental stock reports are structured around a valuation metric that was discredited nearly half a century agoearnings per share.

Author Martin Fridsons previous writings on the stock market include the books It Was a Very Good Year and Investment Illusions, as well as articles such as Ben Grahams Value Approach: Can It Still Work? He has received the CFA Society of New Yorks Ben Graham Award and has been named the Financial Management Association Internationals Financial Executive of the Year. The Green Magazine called his Financial Statement Analysis (co-authored with Fernando Alvarez) one of the most useful investment books ever.