When you are an investor, you should always be on the lookout for the next big investment opportunity.

It may soon be time to take profits on some of my investments. Some shares I will have already sold. So there is always some spare cash to invest.

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That’s why I keep a busy watchlist which I check regularly. If I hear about a company with strong prospects, which is doing incredibly well, or which has been heavily oversold, then I may add it to this watchlist. Likewise, if a company looks overvalued, I may remove it from the watchlist.

Currently I am running the rule over two companies: Tesco (LSE: TSCO) and Carillion (LSE: CLLN).

Tesco

I have written about Tesco many times. This is a company which has long dominated the UK retail landscape, but whose share price is in freefall through a combination of increased competition at both the high and low ends of the market, and a muddled strategy which has lacked a clear message about what Tesco is really about.

But my local Tesco still seems as packed as it’s ever been, and the company still generates a tonne of cash. Plus the company is beginning to look cheap, at a P/E ratio of 11.2 and a dividend yield of 6.7%. This reinforces my view that Tesco is a strong turnaround prospect.

But I must emphasize that the turnaround will take time. Earnings are still falling, as margins tumble in a fierce price war. That’s why I’m not buying yet, as I suspect the share price will fall further.

Carillion

Building and infrastructure business Carillion is a company which I have invested in before, taking a tidy profit of nearly 50% (including dividends) after a year’s investment. I sold at 370p, and the price is now at 330p, with a downward trajectory.

This is a company which is moderately cheap (the 2014 P/E ratio is 9.7, falling to 9.2 in 2015, with a dividend yield of 5.4 rising to 5.6) but which is neither growing rapidly nor in decline. It’s the sort of company which you can rotate in and out of, buying at the troughs and selling at the peaks.

So I’ll wait until the share price falls to the high 200s, and then buy in. If the share price never reaches that level, not to worry – there will be other opportunities.

Foolish bottom line

Whereas Tesco is a long-term investment opportunity, I see Carillion as a medium-term investment/trade. I think both are, in different ways, worthwhile buys. But, with both, I will bide my time, choose my moment, and only invest when the time is right.