How To Profit From MAKING MONEY: Last In The 11-Part SeriesThe IBD 50 list is the signature standard among IBD's CAN SLIM-focused arsenal of investing tools.
Compiled weekly from stocks showing strong fundamentals and promising chart action, it is the top-shelf source for savvy investors building watch lists.
The list leads the MAKING MONEY section on Mondays. It also runs on the eTables page at Investors.com and is updated daily on Leaderboard. Few leaders squeak by and into rally-leading roles without passing through the IBD 50 ranks near the beginning of their runs.
The 50-stock roster lists the strongest stocks first. This week, Apple (NASDAQ:AAPL - News), Alexion Pharmaceuticals (NASDAQ:ALXN - News) and Lululemon Athletica (NASDAQ:LULU - News) top the list. All carry a best-possible Composite Rating of 99 from IBD.
The last three names on this week's list are no weaklings. Netease.com (NASDAQ:NTES - News) carries a Composite Rating of 96 and is up 29% year-to-date. Ubiquiti Networks (NASDAQ:UBNT - News) rates a 93 and has gained 56%. Salix Pharmaceuticals (ARCA:SLX) (NYSE:P) also rates a 96. It has gained 11% so far this year, and just cleared its first base, with a 50.86 buy point, since exiting a 14-month correction.
The IBD 50 is not a buy list.
In a market correction, even IBD 50 stocks can drop fast. In fact, leading stocks can fall 1-1/2 to 2-1/2 times the decline of the major indexes. So always make sure that the Market Pulse in The Big Picture points to a market in uptrend before putting cash to work.
Also, pay close attention to the stock mini-charts, at the bottom of which you will find concise analysis of the stock's most recent action and guidance on the appropriate buy point.
The left side of each page names each company and includes a blurb about fundamentals or news. This feature also includes 10 separate data points, including earnings, sales, relative strength, return on equity and management ownership data.
The charts present a dense array of vital information on company fundamentals, share float, debt and numerous other factors.
Going back to the NYSE composite's follow-through on Oct. 12 last year provides a good gauge of the list's effectiveness.
Numerous stocks on the list, ranging from Tractor Supply (NASDAQ:TSCO - News) to Fastenal (NASDAQ:FAST - News), have gained 30% to 50% or more since the market's follow through. Not all were in bases or near buy points at the time of the follow through.
Some, like Alexion, barely paused for the market's July-to-August correction. Others did not break out until January of this year.
Don't treat the IBD 50 as a fool-proof investing advisor. Arco Dorados (NYSE:ARC - News) (NYSE:O) and Eldorado Gold (NYSE:O) are just two examples of stocks on the list that have had problems since the Oct. 12 follow through.
Investors must always keep their sell rules handy.