How to Find the Right Stocks for Your Portfolio

TUTORIAL: Morningstar's Equity Quickrank helps you find stocks that meet your personal investment criteria, from exchanges and sectors to dividends and P/E ratios Editors 21 April, 2015 | 8:00AM
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Welcome to the homepage of This is the third tutorial video of the series. In the first video, we took you through how to sign up to, create your first portfolio and how to add and track investments. In the second video, we showed you how to get investment ideas by using Morningstar's Fund Screener tool. Now let's take a look at how to use Morningstar's Equity Quickrank tool, which can help you dissect the equity market and search for individual companies we may want to invest in. 

Let's say I'm interested in increasing my exposure to UK healthcare companies. So firstly, I'm going to start my search at the Equities tab. As with all Morningstar cover pages, tools that can help me find specific investment ideas are listed in the central column. I'm going to click on Equity Quickrank. As a UK-based investor, I want to search only for the companies listed on the London Stock Exchange. So I'm going to leave the exchange dropdown set to ‘London Stock Exchange’, but I specifically want to look at the healthcare sector. Click Search to run the search. 

As you can see from the bottom of the page, this is giving me a long list of 207 stocks, so I want to narrow this down further. Back at the top, let's select a specific industry. I'm interested in looking at major drug manufacturers. When you are ready, click Search again. This has now reduced my list from 207 stocks to 38, a much more manageable group. I can sort the list by various criteria simply by clicking on a column’s header. For example, I'm interested in income, so I want to find those companies with the highest dividend yield. So, I'm going to go and click on the Dividend Yield column. This will order the results by the highest dividend yield payers. This quickly tells me that top of the list at present is GlaxoSmithKline. I want to know more about this company, so I click on the company name. 

This takes me to the Morningstar Stock Report for GlaxoSmithKline. I can quickly see specific information about this investment. I can dig deeper into the data by looking at any of the number of tabs below the company name. For example, on the New & Events tab, I can see the latest news on this company, starting with Morningstar's own commentary and then moving on to information from the Alliance News newswire and Regulatory News. 

I can also look on the Directors & Shareholders tab. This page tells me which major companies are shareholders and also how much of a holding in this company the top directors have. As a Morningstar Premium member, this feature extends to show me all of the directors and how much of a holding in the company they have. 

On the Financials & Ratios tab, I can get even more information, in case I'm the kind of person who likes to do my own number crunching. Finally, to get a market consensus on the stock, I can see on the Broker Forecast tab that Morningstar has collated brokers’ opinion on the stock and this tells me that overall the market sees this as a ‘hold’ to ‘weak buy’ stock. 

Premium subscribers will again have the ability to click and view the Broker Forecasts button which gives you even more detail. As a Premium member I have access to Morningstar's Research tab which gives me Morningstar's equity research and opinion of the stock. Here I can quickly see Morningstar's take. For example, I can see that at present the analyst has a Fair Value Estimate for GlaxoSmithKline of 1,510 pence or £15.10. Compared to the current market price this has earned GlaxoSmithKline a 3-star rating from Morningstar. 

A 1-star rating would imply that the stock is overvalued and a 5-star would imply that it's undervalued compared to how our analyst values it. As it's a 3-star stock this implies that the stock is currently fairly valued compared to our analyst valuation. Within the report I can see the Morningstar analyst’s long-term view on the stock including the investment thesis, the analysis of the economic moat or sustainable competitive advantage, valuation, risk factors and management. Together all this information can help me make my investment decision. 

In the next video, we're going to look at Morningstar's Premium features in more detail, including how to use the X-Ray tool to help diversify your portfolio.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
GlaxoSmithKline PLC1,764.00 GBX1.87Rating

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