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Stocks to Watch

Here are some suggested watch lists to keep you on top of the market.

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In a recent Q&A between manager Bob Rodriguez and Morningstar users, Rodriguez had some sage advice about investing in today's market. "Typically," he said, "investor frustration with low investment returns encourages many of them to reach for additional return by taking on more risk. Because of this, they tend to make more mistakes." In other words, they tend to buy into companies that either aren't cheap enough, or are cheap for very good reasons (value traps).

How to avoid these mistakes? One of the best ways to stay disciplined is to keep watch lists of stocks you'd love to buy--if the price were right. These are stocks that may be very expensive today. And who knows? They may never become cheap enough for you to buy or to earn a 5-star rating from Morningstar.

But if you're patient enough, you'll find a good number of these stocks falling into your sweet spot. By monitoring a few watch lists, you'll be ready if they suddenly become cheap, and avoid both overpriced stocks and value traps. Plus, if you monitor these companies regularly, you'll get to know them inside-out, so that when you finally do pull the trigger you'll do so as a truly informed buyer.

Haywood Kelly, CFA has a position in the following securities mentioned above: TWX, BRK.B, EBAY, DELL. Find out about Morningstar’s editorial policies.