Ask Colin

If you have several growth stock investment opportunities, how do you decide between them?

This is a good question. The problem is that it does not lend itself to a simple answer.

One consideration may be that I already have an exposure to the industry segment of one or more of the stocks. In general terms I prefer to diversify, so that might count one or more of them out.

I will be heavily influenced by relative value - the lower the PE ratio and higher the dividend yield, the better I would like the stock.

Chart potential in terms of the width of the last consolidation area (point and figure charting technique) will also be important. The wider the consolidation area the better I would like the stock.

Fundamental outlook for the industry the stock is in.

My opinion of the management.

The past history of the stock. Fundamental and technical. I prefer trends that unfold in a regular way to highly volatile trends - they are too hard to stay in.

My approach in this is not purely mechanical - it is somewhat subjective. This means that I use the judgement that I have built up from over 30 years experience.