Canaccord Wealth's stock selection process

Selecting the right stocks is crucial for building a successful investment portfolio. At Canaccord Wealth, we employ a structured and disciplined approach to stock selection, combining proprietary and trustworthy external research, in-depth analysis and expert insights.

Our stock selection strategies incorporate both a top-down and bottom-up approach to ensure we identify high-quality investment opportunities that align with our clients' financial goals.

Our UK stock selection committees bring together experienced stock pickers from across our offices in London, Jersey, Guernsey, the Isle of Man, Scotland, Wales, and other regional locations. Meeting at least twice a month, the committees work dynamically with our dedicated equity analysts to identify the best opportunities.

What is stock selection?

Stock selection is the process of choosing individual stocks to invest in, based on detailed research and analysis. The goal is to find companies that offer strong returns while managing risk effectively.

Investors take different approaches when deciding how to select stocks. Some look at the bigger picture, assessing economic trends and sector performance to determine which industries are likely to perform well - this is known as the top-down approach to stock selection. Others take a more detailed view, analysing individual companies' financials, leadership, and competitive position - this is called bottom-up stock selection.

At Canaccord Wealth, we combine both methods to develop a well-rounded perspective, ensuring we select stocks that align with our clients' investment objectives, with the aim of building resilient portfolios that can perform in different market conditions.

How to select stocks

We use a rigorous, research-driven process to pinpoint high-quality investment opportunities. Canaccord Genuity’s propriety Quest® tool analyses over 18,000 companies, helping us assess financial strength, valuation, and long-term potential*. We also consult external resources such as Bloomberg, a leading global provider of financial news and data.

Our stock selection approach combines: 

Top-down approach: Assessing global economic trends, sector performance, and industry growth to identify promising sectors

Bottom-up approach: Focusing on individual companies, evaluating their financial health, leadership and market position.

Our criteria for stock selection

Our criteria for stock selection We apply strict criteria for stock selection to identify companies with strong long-term potential. Each stock we consider is evaluated on:

•    Financial strength: we analyse revenue growth, profitability, cash flow, and debt levels to assess a company’s stability and resilience

•   Competitive advantage: We look for companies with strong and lasting competitive advantages, which typically come from one or more key factors; some benefit from scale, allowing them to operate more efficiently and keep costs lower than competitors; others offer greater convenience, making their products or services easier to use or more accessible; a strong brand or superior technology can also set a company apart, making it difficult for rivals to replicate; lastly, companies with high switching costs create loyalty by making it expensive or inconvenient for customers to switch to alternatives.

•    Management quality: experienced and strategic leadership is crucial for long-term success and we assess management’s track record, decision-making, and vision to ensure alignment with these goals

•    Valuation: using our proprietary Quest® tool, we determine whether a stock is fairly valued by examining earnings potential, cash flow, and market comparisons.

Canaccord Wealth also offers a high-quality stockbroking service tailored to clients who want to actively manage their investments. With access to a wide range of asset classes, including UK and international equities, fixed interest securities, and offshore funds, the service provides the necessary tools and expert support to make informed decisions.

Clients can choose from advisory stockbroking for tailored advice or execution-only stockbroking to manage their trades independently, all supported by advanced technology and up-to-date market research.

*Quest® is registered in the UK and in the USA, and common law trademark rights are asserted in other jurisdictions. Quest® is produced by Canaccord Genuity Limited, which is authorised and regulated by the Financial Conduct Authority (FCA).