When it comes to our push button portfolio feature – essentially pre-made watchlists to help you start discovering undervalued stocks – we have two options that are very similar, yet deceptively different: Popular Stocks Watchlist vs Diversified Stocks Watchlist.
Both of these lists are excellent choices if you’re new to the SFTW Investor application and haven’t created many of your own watchlists yet. Let’s walk through some of the differences in each of these lists.
As the name implies, you will probably recognize the brand names in this list – they are the 8 most widely traded stocks in our database. Think of big, very well known companies like Apple, Ford Motor, General Electric. These are almost always large cap stocks.
The pro of this watchlist is that it can help you understand our application features like safety scores and sector/industry composition. However, the downside is that these stocks are not necessarily the most undervalued stocks, and even though a company appears on this list, it could still have a low safety score. Using the previous examples, Apple’s safety score is typically in the high 90s, whereas General Electric has recently had a score of 12. (Remember, low safety scores are just one of many variables in making an investing decision.)
The diversified stocks list also contains 8 simple picks, but instead it picks one company from each of our 8 industry sectors with relatively high safety scores. While all of the push button portfolios can have a degree of diversification, we specifically pull one stock from each sector to create a well-balanced list. We also use the safety score to decide which stock to pick, which helps ensure this list includes stocks poised for future growth.
We like to recommend this list to help encourage investors to explore sectors outside of their comfort zone – many investors have all of their holdings in household brands, typically under the Consumer Goods or Services sectors. Learning about other sectors can help you better understand the ebbs and flows of the markets and perhaps find a new-to-you undervalued investing niche!