Iāve now got into a routine with the passive 90% of my portfolio with a mixture of global stock ETFs and bond ETFs. Iāve also started to pick a few growth stocks with some of the remaining 10%. Iāve picked a few of the usual suspects discussed here (Greatland, SMT, Arrival, Technology Minerals, Twilio) and bought Ā£10-15 each so far.
However as the amounts invested go up I want to get more serious about how I pick stocks and not just follow the herd. Iād like to:-
- Mostly go for UK stocks, both to avoid fees and support local companies.
- Go for companies with an innovation or technical edge.
- Go for companies I understand, so probably not esoteric financial services!
However beyond that I donāt know much about reading the fundamentals of companies. How do you pick stocks? Is there a good guide to understanding the fundamentals and which of them is most important?
Iāve found Genuine Impact, ADVFN and Simply Wall Street; which seem to have a lot of data but picking out the right parts is a little daunting!
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I wouldnāt call any Greatland, Arrival and Technology Minerals Growth stocks. With reference to your comment about UK stocks and your SMT pick: note that SMT is not UK oriented - in fact its stance is that it is very difficult to pick UK stock that fits their investment thesis.
Arrival (the stock I know best of the ones you have mentioned) is a risk laden play. The comments about it on Freetrade tend to be āwishful thinkingā oriented, mostly make use of company PR and tend to underplay problems/threats for the business. So a good adage might be āconfirmation biasā is something to be thinking about. Of course it may pan out ā¦ doesnāt mean it is not a high risk stock.
If you do want to go for a UK āGrowthā stock then I would suggest you research some of the Investment Trusts that have taken a recent pounding because they are Growth oriented see for example BGUK and BlackRockās Throgmorton (THRG).
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I donāt even try, I just buy trusts, eg SMT for global growth, ATT for tech, NAS for small-caps, and so on. Thereās an opportunity cost to picking stocks and Iād rather pay someone more qualified do it for me.
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Iāve got no delusions about beating the pros! I want to pick a few stocks for myself to learn more about business and to make sure I donāt fiddle with the main part of my investmentsā¦
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What would we call the likes of Arrival and Greatland Gold? āMoonshotsā, āHope over experienceā? I can definitely see confirmation bias and believing a companies hype being a problem.
Good point about SMT; I donāt object to investing abroad but Iād prefer to keep things local for my own picks.
I hadnāt thought about using a fundās holdings as a shortlist but it makes sense to me. Throgmorton holds some odd stuff though, I wouldnāt have had WH Smith down as a growth stockā¦ I think Iāll go through the list and find some companies that could change the world and go from there!
Thatās fair enough in terms of wanting to learn.
THRG is a small-cap trust rather than a global growth one. It targets the bigger end of UK small-caps.
You could do a lot worse than build a shortlist based on the holdings of UK small-cap trusts ā such as BRSC, RIII, OIG, JMI, ASL, IPU and HSL ā then use a stock screener to whittle it down.
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Thanks for the list of trusts, thatās enough to keep me going for a long time 
Do have any suggestions for stock screeners? The oneās Iāve found seem to be either costly or US focused.
No worries. Be warned, finding UK growth companies will be like finding a needle in a haystack!
I havenāt used screeners in a while but I liked Yahooās free one despite it being a bit buggy. I canāt remember whether UK stock coverage is any good. Itās hard to fault Simply Wall Street, I have a couple of free accounts. I used Genuine Impact briefly; itās by no means bad but I preferred the other two.
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Youāre right about the needle in a haystackā¦ I canāt see much out there in the UK that isnāt either a huge long shot or pretty steady. In the end I plumbed for two new stocks:-
- Oxford Instruments - Make scientific instruments which feels like selling shovels to gold miners in todayās world! Are well established with a solid balance sheet and reasonable revenue and earnings growth prospects in the next few years.
- Ceres Power - A riskier choice but I wanted to get in on the energy transformation business. Ceres arenāt profit making but they appear to be further along the road than ITM and other hydrogen businesses plus I like their licensing business model as it could scale up quickly.
Hopefully my thoughts on these arenāt daft! Iām planning to gradually build up a small holding in these over the next few months. Thanks for idea of using a couple of Simply Wall Street free accounts too, 10 reports a month should be plenty for me.