The O'Neil Strategy Picks Five Pricey Winners

This column was originally published on RealMoney on Sept. 26, 2007, at 11:34 a.m. EDT. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.

Those who have followed my recommendations know I pick stocks on the basis of automated strategies I created that use the variables cited by a number of well-known investors, such as Peter Lynch, David Dreman and Martin Zweig.

Many of these strategies have aspects in common, such as seeking reasonable price-to-earnings ratios so as not to overpay for the stock, and looking at growth to be sure the company's prospects are strong. But one of these strategies walks a different path from the others: the strategy I base on William O'Neil's writings.

This is particularly true when it comes to the price of a stock. Though the adage "buy low, sell high" is taken as scripture by many, the O'Neil strategy thinks differently. It likes to find stocks that are high today and have momentum behind them. The idea is that these are likely to break out into new territory in the future. ...