Using Investor s Business Daily To Find Winning Stocks.

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1 WWW. Using Investor s Business Daily To Find Winning Stocks. This Quick-Start Guide is designed to show you how to get the most out of Investor s Business Daily s innovative features and help you become a more educated, confident investor. We ll show you the most valuable and time-saving features in IBD, give you definitions and explain why certain areas of the paper are vital if you want to make money in the stock market. YOUR QUICK-START GUIDE With IBD you can easily: Discover new investment ideas. Find stocks setting up for possible breakouts. Gauge the true health of any stock. Track and understand current market conditions. Red-flag individual stock & general market sell signals. Learn the finer points of smart investing. Every day you ll be learning a little more about the historically grounded, common-sense investment rules and guidelines IBD was founded upon. We hope you find this guide useful. Here s to your future investing success! IBD s Top 10 Your fast briefing on the day s top stories. In minutes you get up to speed on the markets & economy. IBD 100 Profile Your search for new investment ideas could start here. Throughout the week, IBD gives you an indepth assessment of a leading company selected from the IBD 100 Index of top-rated stocks. Next, you should always carefully study the stock chart and read prior IBD archived stories on the company to know as much as possible about the stock before any purchase during an uptrending general market. Online Resources: Subscribers have full access to the IBD Archives on Investors.com. Search for prior IBD articles using ticker symbols, keywords, date ranges and more.

2 Only have a minute? You get IBD s quick analysis of market conditions with this clear, concise summary of the day s action. Plus, we show you a few top-performing stocks of the day. When the current outlook first says market in correction, always check stocks you could sell to raise some cash. The Big Picture Online Resources: For a complete understanding of the terms commonly used here (rally, distribution day, etc.), visit MUST READ! Three out of four stocks follow the market s direction. So should you. The Big Picture gives you a daily briefing on market direction and objective analysis on the price action of leading stocks. This is not personal opinion; rather, IBD editors help you understand the market s direction and its key indicators, which are vital to your investing success. The Big Picture helped observing readers get out of the market before the big losses in Online Resources: IBD s market editors cover the action every two hours during market hours. It s the top story on Investors.com. NYSE and Nasdaq Stocks On The Move Side-by-Side! IBD s one-of-a-kind daily screens list stocks trading in much higher than normal volume, indicating institutional buying. This helps you spot leaders you won t find on standard most active lists appearing in other newspapers. Stocks On The Move also shows you stocks that are down in higher than average volume, a sign of weakness and possible further price declines. Online Resources: Our intraday version of this screen is on the homepage of Investors.com and updated every two minutes during trading hours! Stocks Just Out Of Bases / Stocks In Bases These exclusive IBD features use an advanced screening process to select high-quality, liquid equities. With Stocks Just Out Of Bases, we show you quality stocks that have recently broken out, but are still within 10% of their chart s base. With Stocks In Bases, you ll see stocks that have been in the process of forming bases for at least five weeks. NOTE: Bases represent periods of consolidation where stocks tend to set the stage for powerful breakouts and price run-ups. Online Resources: To learn the basics of chart analysis and how to recognize sound, properly formed bases, go to

3 HOW S THE MARKET How s The Market Page MUST READ! Top 10 Fidelity Industry Funds This innovative IBD exclusive list gives you a valuable overview of what sectors are leading the market based on the performance of Fidelity s leading industry funds. Another great place to find investing ideas! IBD s founder created the first daily stock computer database in the 1960s. IBD now has models of all top-performing stocks each year from 1880 to We analyzed all key fundamental & market variables present just before these super-winners increased 100% to 1000% and up. They all emerged from one of seven classic price consolidation structures (chart bases of seven to 65 weeks). Crucially, over 90% of these bases were formed during general market sell-offs that occur once or twice a year. So, the correct time to learn to buy the next potential big new leader that has accelerating earnings and sales is when a key general market index finally rallies. The signal occurs on a fourth or later day of its attempted rally, when the index has a follow-through day up a huge percentage in price on a volume increase from the day before. Once this happens, the best stocks typically move up in price and emerge from properly formed bases. Therefore, you need to learn to read charts and track IBD s market indexes. IBD s The Big Picture column will help you by pointing out follow-through days as well as periods of excessive distribution (selling) days over any 4 or 5 week period. After the August 2007 Nasdaq chart follow-through day, Mosaic Fertilizer and First Solar almost tripled and dozens of leaders increased 50% to 100%. From the July 06 follow-through, Apple Computer was up from $70 to $200, Research In Motion $28 to $137, Priceline.com $33 to $120. From the August 04 follow-through, Google went up $113 to $747, Apple $16 to $200. From October 1990 follow-through day, Charles Schwab during the 1990s was up 10,000% and Cisco increased 80,000%. So, keep learning more from IBD and discover how to capitalize on America s relentless parade of remarkable new entrepreneurial leaders! MUST READ! IBD s 197 Industry Sub-Group Rankings Help You See New Trends! Specific industry groups lead every new market uptrend, & specific stocks within those groups are the drivers. Group action also influences at least half of a stock s performance. IBD s 197 Industry Sub-Group Rankings filters stocks into very specific sub-groups to help you find where the real leadership resides. For example, oils have done well in recent years, but leadership has rotated between sub-groups, i.e. drillers, refining. This helps you focus on key stocks driving the trends and making better price gains! It s essential information you can t get anywhere else! Industry rankings are computed based on performance over the past week, three, six and seven months. Strongest groups each day are boldfaced to identify potential trends early on. The weakest are underlined

4 SUCCESSFUL INVESTORS READ INVESTOR S BUSINESS DAILY IBD s New Research Tables Help You Save Time and Spot Leading Stocks! IBD s Research Tables revolutionize how vital stock data is presented and dramatically cut the time it takes you to find winning stocks. 1 Stocks are first filtered by the best-performing 33 broad economic industry sectors. 2 We show you up to 10 fundamentally and technically superior stocks alphabetically at the top of each sector list. Select top performers may be featured with a chart right in the table! 3 Tables have wider columns & bigger type, making them easier for you to read than ever before. 4 NYSE and Nasdaq stocks are combined into one table to further save you time. At least 2,500 stocks are listed -- 1,000 more than other leading business dailies. With this exclusive format, you can do a quick 30-second scan of IBD s first several sectors and immediately spot up to 30 high-rated stocks in the best market sectors! Sorted By Top Sector Performance 1 Actual Size in IBD Up To 10 Top Performing Stocks Are Spotlighted 2-4 -

5 INVESTOR S BUSINESS DAILY SUCCESSFUL INVESTORS READ INVESTOR S BUSINESS DAILY IBD s Key Ratings No Other Source Gives You We rate and compare all domestically traded stocks in IBD s huge database to give you a fast assessment of a stock s strengths and weaknesses and overall potential. You have daily updates on the most relevant and vital performance measurements. No other daily financial paper offers you this data! -Wider Columns -Bigger Type -Easier To Read 3 1. COMPOSITE RATING: The IBD SmartSelect Composite Rating combines all 5 SmartSelect Ratings into one easy-to-use rating. More weight is placed on Earnings Per Share & Relative Strength. Stock s percent off its 52-week high is also included in the formula. 2. EARNINGS PER SHARE GROWTH RATING (EPS): Compares short- and long-term profit growth of every publicly traded company and ranks them from 1 to 99. A stock with an EPS Rating of 99 has delivered profit growth better than 99% of all other companies. 3. RELATIVE PRICE STRENGTH RATING (RS): Looks at how much a stock has gained or lost in the past 12 months and compares its performance with every other publicly traded company (1 to 99). 4. SALES+MARGINS+RETURN ON EQUITY RATING (SMR) : Graded on an A to E scale; lets you spot companies with superior Sales Growth, Profit Margins, and % Return on Equity. Actual Size in IBD 5. ACCUMULATION / DISTRIBUTION RATING : This important rating, unavailable elsewhere, accurately tracks the relative degree of professional buying (accumulation) and selling (distribution) in a particular stock over the last 13 weeks. Updated daily, stocks are rated on an A+ to E scale. A = Heavy buying to E = Heavy selling Online Resources: You can use the Stock Quotes & News investing tool on Investors.com for a quick view of SmartSelect Ratings for any stock! NYSE and NASDAQ Combined 4 Vital Ratings for 2,500 Leading NYSE & Nasdaq Stocks IBD s New Research Tables Help You See Top Performers in Seconds! 1. Volume % Change: IBD s unique supply and demand indicator when combined with a stock s price change is the truest measure of trading in a stock. A quality stock up in price with a big volume % change could be the first hint big investors (mutual funds, etc.) may be moving into a stock, which is likely to push up the price over time Boldfaced Composite Rating: Any stock with Composite Rating 95 or higher... making it easy for you to scan for toprated stocks Stocks With a Dot: Denotes that a New America or IBD 100 story was written about the company in the past six months Boldfaced Stocks: Stock closed at a new 52-week high or price is up at least $ Bold Italicized Stock Name: Was a new issue in last 8 years, EPS and RS Rating 80 or more (all positive signs) Boldfaced 52-Week High: The stock s price is within 10% of its 52-week high Underlined Stocks: Stock closed at a new 52-week low or price is down at least $

6 INVESTOR S BUSINESS DAILY STOCKS IN THE NEWS Stocks In The News Showing you market-leading stocks every day, it s a great place for you to find investing ideas, especially as soon as a key general market index has a follow-through day (FTD) and starts a new uptrend. Historically, FTD s succeed 70% of the time and the best new leaders break out in the first 3 weeks when most people hesitate buying. Don t miss these future turns! Charts are selected by a daily screening. Also, IBD editors give you a detailed analysis on select stocks to help you assess their potential. Online Resources: Use IBD Charts on Investors.com to accurately spot the potential buy points we discuss here. Leading Market Sector Indexes These market sector indexes track stocks representative of key sectors of the U.S. economy. The top-performing sectors year-to-date are shown daily, YTD % change is at the top right above each chart. Where possible, companies comprising the sector index are listed, to show you stocks behind the trend. M U ST R E A D! IBD s 52-Week Highs and Lows Unlike any other business or financial publication, IBD combines all NYSE and Nasdaq stocks making new price highs or lows and places them into IBD s 33 broad industry sectors. We then list the sectors in order of those showing the largest number of new highs followed by the sectors showing the largest number of new lows. This quickly lets you recognize and understand which industry sector is the strongest (as of June 2008, it s Energy... you ll probably want to check into these) and the weakest (Utilities... you ll probably want to avoid for the time being). But that s not all. IBD then lists new highs within each sector in order of ones that showed the greatest % increase in their trading volume for that day. Each stock s symbol is shown so you can easily check an IBD chart on Investors.com. IBD also gives you the stock s EPS rank, closing price and if a chart is also in that day s Stocks in the News section. Stocks with an EPS rank of 95 or higher are boldfaced. Finally, IBD provides you with 5 other professional measurements for you to cross-check and zero in with unmatched accuracy on the top sector for your investments, plus the sectors for you to avoid: 1. IBD s brand new stock tables sorted by sector with the best recent price action. 2. IBD s 197 Industry Sub-Group table 3. IBD s box of groups with the highest % of their stocks making new highs. 4. Fidelity s year-to-date top 10 performing industry funds. 5. IBD s leading market sectors daily mini price and volume charts. Now it s up to you. -6-

7 MUST READ! The 20 Rules are based on decades of research into how the market actually works -- and they re the foundation for all the features, screens and tools you will get with Investor s Business Daily and Investors.com. If you get serious and carefully follow all of these historically proven rules, your investment results can substantially improve. You can do it if you make up your mind! IBD S 20 Rules For Investment Success 1 Focus on stocks with each of the last three years earnings up 25%+, return on equity of 17%+ and recent earnings and sales accelerating. Recent quarterly earnings and sales should be up 2 25% or more. 3 Avoid cheap stocks. Buy higher-quality stocks selling at $15 a share and higher. 4 5 Learn how to use charts to see sound base patterns and exact buy points. Cut every loss when it s 8% below your cost. Make no exceptions so you can always avoid huge, damaging losses. Never average down in price. Follow selling rules on when to sell and take profit 6 on the way up. 7 Buy when market indexes are in an uptrend. Reduce investments and raise cash when general market indexes show five or more days of volume distribution. Read IBD s Investor s Corner and Big Picture columns 8 to learn how to recognize important tops and bottoms in market indexes. Buy stocks with a Composite Rating of 90 or more 9 and a Relative Price Strength Rating of 85 or higher in the IBD SmartSelect Corporate Ratings. Pick companies with management ownership of stock Buy mostly in the top six broad industry sectors in IBD s New Highs List. Select stocks with increasing institutional sponsorship in recent quarters. Current quarterly after-tax profit margins should be improving, near their peak and among the best in the stock s industry. Don t buy because of dividends or P-E ratios Pick companies with a superior new product or service. Invest mainly in entrepreneurial New America companies. Pay close attention to those with an IPO in the past 8 years. Check into companies buying back 5% to 10% of their stock and those with new management Don t try to bottom-guess or buy on the way down. Never argue with the market. Forget your pride and ego. Find out if the market currently favors big-cap or small-cap stocks. Do a post-analysis of all your buys and sells. Post on charts where you bought and sold each stock. Evaluate and develop rules to correct your major past mistakes. IBD 100 MUST READ! IBD 100 Performance Weekly changes in the IBD 100 since its inception vs. the S&P % 250 IBD 100: 231.4% S&P 500: 49.3% Performance 5/2/03 to 5/9/08 IBD 100 The IBD 100 is our proprietary index of leading stocks trading in the U.S., showing superior earnings, strong price performance and leadership within their industry. Since its inception, the IBD 100 Index has vastly outperformed the S&P 500. (See chart at right). Published in every MONDAY issue More ways to find winning stocks IBD Big Cap 20 - Ranking of leading large-capitalization companies trading in the U.S. is based on a combination of each company s profit growth and our Composite and Relative Price Strength ratings. 100 Published in every TUESDAY issue. Your Weekly Review - Based on the IBD 85/85 Index, this computer generated stock list is another place to find great investing ideas! 50 Published in every FRIDAY issue. 0 May

8 INVESTOR S BUSINESS DAILY SUCCESSFUL INVESTORS READ INVESTOR S BUSINESS DAILY IBD Timesaver Table Designed to save you time by showing highest-rated NYSE and Nasdaq stocks making significant price moves up or down. We highlight 50 stocks up 1+ points or making new highs and 50 stocks down 1+ points or making new lows. Table is sorted by Composite Rating. IBD Industry Themes Spotlights Sectors Driving the Market This daily column analyzes the action of industry groups and sectors that are driving the market. We show you the fundamentals behind the group movements, and help you focus on leading stocks in the top groups. The Best of the NYSE and Nasdaq in One Daily Column IBD combines these daily market columns to focus on the best institutional-quality stocks. We highlight the day s breakouts, constructive action in current bases, and secondary buy points. We also flag potentially negative action as some stocks reach their peaks to help you protect gains. -8- The Long-Term Investor This new column is for investors who prefer stocks with greater liquidity and consistency. We focus on bigger-cap, steadier performers based on earnings stability and growth. We ll discuss news, earnings, and show you potential entry points.

9 INVESTOR S BUSINESS DAILY SUCCESSFUL INVESTORS READ INVESTOR S BUSINESS DAILY IPO Filings / Recent IPOs An IPO is the initial public offering of shares in a company. On the day the stock goes public, there can be strong demand for shares. We don t usually recommend buying IPOs right out of the gate due to their untested potential, but they re worth watching because some may set the stage early on for healthy and stable price run-ups. A number of big new market leaders in the last 20 years were companies with their IPOs in the prior 8 years. The Income Investor This new feature covers dividend-paying stocks and methods of the best income fund managers. You ll get dividend increases and decreases and potential entry points for these stocks. Plus, payout ratios, dividend histories, and growth rates. We ll also interview notable fund managers on how you should build your portfolio. The Base Reader Helps You Spot Key Buy Points! The Base Reader shows you superior, institutional quality stocks building chart bases, and points out possible buy points. Stocks are derived from The Base Reader Helps You The Income a demanding fundamental screen to obtain high Investor Spot Key Buy Points! quality. Other key factors considered are weekly This feature covers dividend-paying accumulation/distribution, industry developments, The Base Reader shows you stocks and news. We llstocks also help you recognize theand methods of the best institutional-quality building income fund managers. You ll get difference between sound and possibly faulty chart bases, and highlights possible dividend increases and decreases bases. buy points.. Stocks are derived from and potential entry points for these a fundamental screen to obtain high quality. Other key factors considered are weekly accumulation/distribution, industry developments and news. We ll also help you recognize the difference between sound and possibly faulty bases. stocks. Plus, payout ratios, dividend histories and growth rates. We ll also interview notable fund managers on how you should build your portfolio. -9- International Leaders Helps You Find Winners Overseas! This column spotlights leading foreign stocks traded in the U.S. and overseas. IBD s exclusive fundamental and technical methodologies will show you explosive growth opportunities outside the U.S.

10 We show you investing opportunities with promising companies MUST READ! The New America page gives you an in-depth look at progressive, lesser-known entrepreneurial companies that are changing the way people live or do business. To be selected, companies must show robust year-over-year increases in earnings and revenue, and their stocks must be outperforming the general market. In some cases, the company has just recently turned profitable or is rebounding out of a business slump. Candidates usually have an innovative new product or service, or are benefiting from a major new industry trend. Companies are chosen by IBD s market editors after thorough research. Studies show the real leaders in each new bull market are companies like these, and you ll find most of them in IBD! New America Archive List of companies recently profiled in The New America; well worth researching further. Published in every TUESDAY issue. Read up on the best of the newcomers This once-weekly section focuses on the IPO (initial public offering) market. Here we show you companies expected to go public that week, and examine trends and key players in the IPO market. Stories profile potential leading companies and new stocks that are already proving themselves. Published in every TUESDAY issue. Why is The New America so important? This is one of the most popular features in IBD, and for good reason. We write about innovative companies that may not get much attention in the mainstream. And most of these companies share many, if not all, of the traits of past market winners. These innovators often lead the next stock market advance. Here are just three of many examples: Chipotle Mexican Grill (CMG) Date Featured: 07/03/ /09/06 Price: $ /26/07 Price: $ GAIN: 171% IBD New America New America vs The Market From 10/02/08 to 06/02/08 S&P 500: 38.9% New America: 266.7% First Solar Inc (FSLR) Date Featured: 03/19/ /23/07 Price: $ /26/07 Price: $ GAIN: 382% Continental Resources (CLR) Date Featured: 02/27/ /27/08 Price: $ /02/08 Price: $64.35 GAIN: 129% In fact, we track the six-month performance of all these companies in our exclusive IBD New America Index (shown on the How s The Market page). New America stocks have outperformed the S&P 500 by a factor of 5. But, being newer companies, they are more volatile than most equities. There is usually a time to buy them and a time to sell and recognize worthwhile gains. Online Resources: 1 2 You can access most IBD articles and columns online, including The New America, the night before the paper is published. Just go to the Today In IBD section on Investors.com. You have full access to the IBD Archives on Investors.com. Search for articles using ticker symbols, keywords, industry groups, article types and date ranges. This is an excellent venue for finding new investment ideas, by exploring previous The New America profiles

11 Learn how stocks really work. IBD s founder, William J. O Neil, is renowned for having built detailed models of all the most successful stocks every year from 1880 to He analyzed what factors existed before these very best companies made huge advances, and how these factors changed when the stocks topped. Winning Ways gives you an exclusive glimpse at examples from our model books. Here we discuss what an actual stock looked like before a breakout, during its run-up, through its corrections and when it topped. Published in every MONDAY issue Online Resources: Our market editors also conduct this type of analysis on current stocks, with the Daily Stock Analysis. You can access these at which are also presented in videos to help you better understand the key elements of successful chart reading. Also, our archive of previous DSAs is a great resource for learning stock evaluation. IBD teaches you essential investing strategies every day Appearing each day in IBD and at Investors.com, this is the best way to begin broadening your knowledge. This section serves as a tutorial on IBD s unique tools and addresses investment questions on buying, selling, chart analysis, spotting market trends and much more. Online Resources: Visit our Investor s Corner Archive on Investors.com (under Today In IBD) for a huge library of previously published articles. They are grouped into seven main topics, from chart reading to investor psychology

12 Your Subscription Includes FREE ACCESS to Powerful Investing Tools on Investors.com Make sure you re getting the most out of IBD by logging on at If you don t have a password, get registered now at: IBD Stock Checkup Instant expert assessment of over 7,000 stocks, - just enter a ticker and see how your stock sizes up against the overall stock market and within its industry. New Investing Ideas Use our exclusive daily and intraday stock screens, which scour the entire market for stocks showing the key characteristics historically found in all winning stocks! Screens include convenient links to the IBD Stock Sheckup, IBD Charts, article archives and more! IBD Charts Sharp detailed daily and weekly charts allow you to quickly check for bullish chart patterns, institutional support, buy points, etc Investor s Business Daily, Inc. Investor s Business Daily, IBD and CAN SLIM and corresponding logos are registered trademarks owned by Data Analysis, Inc., an affiliate of Investor s Business Daily. MP