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How to pick potential stocks

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Investment tips: How to pick potential stocks18 Dec, 2011, 0546 hrs IST, Kavita Sriram, ET Bureau After the correction, the markets have almost reached the bottom. Perhaps, this may be the ideal time to add some new stocks to your basket. Here are some popular stock-picking strategies:

Bottom up investing

Here, the investor filters stocks of companies that have inherently strong fundamentals . Companies are evaluated for strength and efficiency of the management team as well. The ability of the management team in strategic decision-making and building value is a significant contributor to a company's growth.

In a bottom up investing approach, it must be noted that the investor picks a company's stocks based on its performance and fundamentals and not on performance of the sector. Historical performance of the company and its growth prospects also help assess it.

This approach is usually considered a narrow strategy where the broader economic climate and industry per…