Advice needed on buying stocks for a stock market project?

No actually is involved, but the objective is to pick stock that have the potential to do well compete against one another to see how picked the 5 best stocks. We are required to pick a stock from each sector and right now, I'm working on Basic Materials.

I leaning towards Cheasapeake Energy Corp. (CHK) (it did really well in Feb), but EOG Resources (EOG), Randgold Resources (GOLD), and Olympic Steel Inc, (ZEUS) are doing pretty well. Which one of these do you think is the best to invest in?

Any other information related to selecting stocks for the other 4 sectors is much appreciated.

Look at return on assets. If a company has a higher ROA than its peers and it has a PE less than or equal to it peers, it's a company worth doing due diligence on to determine just how good it really is.

ROA reflects the efficiency of a company's use of assets, both financial and tangible. Asset turnover is the second biggest multiplier, next to debt. If you decompose ROE to NI/S x S/A x A/E you can see that asset turnover (S/A) can have a lot of punch.

A company that can consistently do more with less should, in the long run, do very well. If you find a company that's still in its growth stage and has a relatively high ROE and relatively low PE, it should be a winner. The question is: How soon?

Forget about the Wall Street fads and stick with the basics, and it doesn't can much more basic than ROA. Of course, capital structure (another basic) needs to be in line with industry norms, too.

Don't forget to reverse engineer the financial statements to see the real deal before you start crunching the numbers!

Love your choice of CHK,

you could go to MSN Money, /stocks/ or Zacks.com they have stock screens where you can screen a large data base to meet your needs, They also provide write-ups and professional opinions so you can use your current list and get professional help - plus it's free


Good luck

These are all over-priced as far as their 200 day moving averages show, so I wouldn't buy any of them. Several analysts like CHK, so I'd watch that one, but most of these stocks have a 1 year target price below the current price, which doesn't look good.