Dykstra: Doing Your Homework Pays Off

I try to pick companies with good, solid fundamentals. I look for solid historical and expected returns, good cash flow and low debt levels. When I find a new stock that fits my criteria, I add it to my list and make it a pick when I believe the market has undervalued it.

In recent months, I've followed stocks like General Dynamics(GD), Foster Wheeler(FWLT), Occidental Petroleum(OXY) and Transocean(RIG).

A stock becomes a pick based on its technical trends -- such as its moving averages. I watch these to see what direction it's headed. I also watch market trends for news that will impact that stock's industry and its performance. I also watch for Wall Street operators to make a mistake and undervalue the stock.

These are the strategies that enable me to pick good stocks that will turn hot at some point, enabling me to cash out. In the end, they pay off. And some weeks, those payoffs hit the ball out of the park.

>To order reprints of this article, click here: Reprints