What’s the goal of IBD’s world-class research tools for individual investors who want to learn when to buy stocks with success? To help you perform a soup-to-nuts study of the most important characteristics found in big stock market winners. Details matter. But so does saving time.
MarketSmith features help you quickly check if a growth stock has the backing of the best fund managers in the land. We call that meeting the I in CAN SLIM. The I stands for Institutional Sponsorship.
Strong fund ownership bespeaks a simple yet powerful truth about how Wall Street really works. The stock that can attract more funds over time stands a greater chance of rising faster than the overall stock market.
Think of the market as made up of three kinds of growth stocks: true champions, contenders and pretenders. Champions will see growth in the number of mutual funds, insurers, banks and pension funds buying their stock. They hold up well after a breakout from a high-quality base. They hit new 52-week or all-time highs and, like the Energizer Bunny, just keep going.
But an increase of fund owners is just part of the puzzle. You want to see these shareholders be of high quality.
When To Buy Stocks: Confirm The ‘A’ And ‘A+’ Funds
Does the stock boast numerous mutual funds that get an A or A+ three-year rating from IBD? Do these funds have a large stake in the stock, too?
On MarketSmith, the “Owners & Funds” feature — accessed by unveiling the right-hand data panel on all weekly charts — gives you the data in a snap. It also shows whether any members of the IBD Mutual Fund Index also own a piece of the company. You can see the index components in the General Market Indicators Chart by going to the “Market Trend” section on Investors.com.
Take Advanced Micro Devices (AMD). Mutual funds owning shares have nearly doubled from 1,005 in the middle of 2018 to 1,903 through March 2020. Extraordinary growth. In May, two IBD Mutual Fund index members held a stake in the maker of Epyc and Ryzen processors for cloud-computing services and PCs.
Click on the “Show Fund Ownership” tab. Out comes a bottom panel, displaying all 1,903 funds that hold AMD shares. Rank them by share of the stock’s total shares outstanding being held by the fund itself; percentage of the fund’s total assets in a stock; fund objective; one-year return; and IBD ranking (from A+ to E). Use the flag feature to find out whether your favorite funds own other stocks on your watchlist.
AMD has staged a pair of major breakouts: first past a 13.95 buy point on June 1, 2018, then above a 35.65 entry in the week ended Nov. 8, 2019.
More Mutual Funds To Watch
IBD Live presents attendees a separate list of 21 key mutual funds handpicked by the markets team. Many also appear in the IBD Mutual Fund Index. All of these funds share a long-term track record in picking growth stocks with superb CAN SLIM characteristics.
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