At the end of each investing day, you can turn on any financial network and read a list of the biggest stock movers of the day. We often find the great stock pick at the end of the day rather than the beginning. If you’re a day trader, it doesn’t help to find out after the fact.

If you are a long term investor, a great stock pick is easier to find because time is on your side. You can watch for a trend in both the charts and the fundamentals that will allow you to make educated decisions about where you believe a stock is trending but how do we know a great stock pick when we see it?

The key is in the analysis. A combination of fundamental and technical analysis, combined with a little street smarts and luck will make you a whole lot of money if you’re patient.

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Look at the stock’s balance sheet. If you are looking at a small company who is just getting their start, some debt should be expected but for those companies that are well established, one rule for the conservative investor is easy to follow: A company with a lot of debt isn’t going to be a great stock pick.

Warren Buffett says to avoid leverage. Avoid it in your home finances and avoid it in your stock picks. Companies with large amounts of debt cannot grow. Debt causes a company to move backwards so before they move forward, they have to at least get back to zero.

Because large scale professional investors move a stock, and they know how to read a balance sheet, you can be sure that debt is priced in to a stock. By investing in a debt laden company, you are putting your hard earned dollars in to their debt.

A great stock pick will have a lot of cash. Cash equals opportunity and opportunity equals expansion. Just like you and I, if a company wants to expand, they have two choices: Pay in cash or go in to debt. A company with cash on hand starts to see the benefits of their expansion from the very beginning where a debt laden company has to pay back their debt before they see the benefits.

What does that mean to you? Replace “company” with “I” and you’ll know. If a company has cash on hand “I” will reap the benefits of the expansion right away.

If you don’t have the time or don’t feel confident that you can make the best investment choices, consider subscribing to a service like Action Alerts Plus where an expert like Jim Cramer is doing your research for you and all you have to do is buy and sell when they tell you to execute the trade. My secret is that I don’t have enough time to do all of my research so I let Action Alert Plus do it for me.

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The first book I ever read about investing was Jim Cramer’s Real Money. Click here to go to the elementary finance bookstore to order your copy. You can also take a look at the book in the box above. Although the first book, it is still the book I reread once every year.