Tech Investing Rule No. 5: How to Find Stocks That Can Double Your Money

14 | By Michael A. Robinson

When we started this journey together, I told you how most Americans have little or no net worth.

But I also shared the solution, explaining that the road to wealth is paved by tech – meaning technology stocks are the one way you can create meaningful wealth.

However, you can’t just invest in any tech firm and hope for the best; you have to identify the ones that can actually help make you rich.

Over the last couple of weeks, I’ve been slowly introducing you to the five rules I use to identify precisely those kinds of wealth-building tech rockets.

I’ve already demonstrated the first four of those strategies – and have identified a top profit pick with each one. Today I want to tell you about the final rule.

And I’m also going to show you a surprising tech stock that meets each of the five stringent guidelines.

Tech-Wealth System Rule No. 5: Target Tech Stocks That Can Double Your Money

Finding stocks that can double your money isn’t that tough – if you know what to look for.

You need to find companies that are growing earnings at high rates – 15%, 20%, 30% or more a year…

As surprising as it sounds, finding companies that are generating that kind of profit growth for the present is really very easy.

But the real trick is finding companies that can keep doing it.

And that’s where my five rules come into play.

These five guidelines are kind of like a shopping list, or even a recipe – a shopping list that helps you find great companies… and a recipe for the kind of wealth that gives you a stress-free life today, and a worry-free retirement tomorrow.

And right now, my “shopping list” tells me that one of those great companies is FleetCor Technologies Inc. (NYSE: FLT).

The Norcross, GA-based FleetCor is what many investors might refer to as a classic “pick-and-shovel” play. It doesn’t develop smartphones, or gaming software or a tech product that you’d use – or at least be familiar with.

FleetCor serves the oil-and-gas industry, providing payment cards and transaction processing. And its sophisticated algorithms help combat cyber-fraud.

In other words, it’s the kind of company whose technology let’s other companies operate efficiently.

Its technology is invisible.

As boring as that sounds, remember this: About 300,000 “Miner Forty-Niners” came to California hoping to strike it rich during the gold rush of 1848-1855. But it was the merchants who discovered the real “mother lode” – by selling the picks and shovels the gold-rushers needed to pursue their dreams.

And today, clients are lining up to use FleetCor’s “boring” payment network.

The company serves more than 500,000 commercial accounts with millions of cardholders spread out across the U.S., Canada, Mexico and 16 other countries.

FleetCor manages relationships with more than 800 partners. They range in size from mammoth oil companies to mom-and-pop shops with just a single fuel stop.
Now that I’ve introduced you to the FleetCor story, let me show you how my five rules helped me find this hidden gem – and show you how it could help fatten your portfolio over the next several years.

  • Rule No. 1: Great companies Have Great Operations – When Ronald F. Clarke joined FleetCor as its CEO back in 2000, he’d already enjoyed successful stints at Automated Data Processing, Booz Allen Hamilton and General Electric Co. And he was joining a successful company – one that sold “fleet” payment cards to a bevy of smaller firms. To remain successful, however, Clarke knew FleetCor needed to broaden its offerings – to evolve from a one-product provider to a marketer of multiple services to that same group of customers. It grew internally – investing in technology, expanding the acceptance of its payment cards, and building a sales force. It also made selective acquisitions. Twelve years, 40 deals and a lot of building later, revenue has grown 600%. And last year FleetCor processed 304 million transactions.
  • Rule No. 2: Separate the Signal From the Noise – To create real wealth, you have to ignore the hype and find companies that have rock-solid fundamentals. FleetCor has a 30% profit margin and a 25% return on equity (ROE).
  • Rule No. 3: Ride the Unstoppable Trends – Look for stocks in red-hot sectors because they offer the best chance for life-changing gains. FleetCor benefited from the trend that saw cost-conscious companies “outsource” non-core functions – and also rode the rapid growth in electronic payments that is completely disrupting the world of checks and cash. The new “digital wallet” wave is further fueling that trend.
  • Rule No. 4: Focus on Growth ­- Companies that have the strongest growth rates almost always offer the highest stock returns. And FleetCor is hyper-committed to growth – using a mix of organic (internal) expansion and dealmaking to keep moving profits higher. In March, for instance, the company snapped up GE Capital Australia’s custom-fleet leasing business. In April, it followed up with the purchase of CardLink, a New Zealand fuel card with near-universal acceptance across that island nation. Both purchases will be accretive to FleetCor’s earnings, which grew last quarter by a stunning 59%.
  • Rule No. 5: Target Tech Stocks That Can Double Your Money – As it turns out, FleetCor grew its earning at a 33% clip for each of the past three years. When growth compounds at that frenetic pace, a stock is on track to double in a bit more than two years. And we’re looking at earnings to continue to surge in the months and years to come. In fact, FleetCor has become such a cash machine that I’m expecting it to grow earnings per share at an average annual rate of at least 22% in the next two years alone. At that pace, this stock is a great candidate to double in as little as three-and-a-half years. And if you sprinkle in a couple more meaningful deals, you could double your money in that stock even quicker.

Forecasting Your Profits

As part of Rule No. 5, let me show you a neat trick that makes it simple to figure out how long it will take for you to double your money with any particular company.

Mathematicians call it the “Rule of 72.”

But I like to refer to it as my “Double Your Money Calculator.”

If you know a company’s earnings growth rate, the Rule of 72 lets you estimate how long it will take for its stock to double. You just divide 72 by the growth rate and you have your answer – in this case 3.3 years. (Doubling calculator: 72 divided by the 22% growth rate = 3.3 years to double.)

In other words, if the company grows its earnings as I forecast (and assuming a relatively healthy stock market, of course), FleetCor’s stock – currently trading at roughly $75 – should trade up to about $150 by late 2016.

To show you this really does work, let me use FleetCor’s past performance as an example of what I just demonstrated.

As I mentioned, FleetCor grew its earnings at an average annual rate of 33% for each of the past three years. At a pace like that, our Doubling Calculator tells us the stock should have been able to double in a bit more than two years.

How did it work out?

On April 29, 2011, the stock closed at $37.51. On April 26 of this year – not even two years to the day – it closed at $75.48.

That’s a gain of 105% – which is precisely what our calculation said should happen.

Let me tell you … it doesn’t take many gains of this magnitude for you to see a major impact on your personal net worth.

Profits like that turn dreams into reality. You can ski the slopes of Sun Valley… vacation in Hawaii… or buy that SL-class Mercedes that you’ve always wanted to own.

Or perhaps you’re more of a “Millionaire Next Door” type… and your dreams are more akin to the simple security of a no-stress retirement… knowing your spouse will never have to worry about money… or having a nice nest egg to pass along to your children.

Whatever your goals, wealth will help you achieve them. And the road to that wealth is paved by tech.

In fact, we’re going to start down that road going forward – with a new mission. As you probably know by now we have changed our name to Strategic Tech Investor.

Every week, I’m still going to tell you about the amazing new technologies that are rapidly changing the world.

But continuing on I’m also going to show you how to make a fortune from these technologies today.

To kick things off, I have an exciting new recommendation… a biotech stock… that I’ve been working on… just for you.

See you next week…

14 Responses to Tech Investing Rule No. 5: How to Find Stocks That Can Double Your Money

  1. Michael Hullevad says:

    If I were an american it would be very good advice. But I am afraid of the Qe to infinity. So I only buy CDN or AUS stocks!

    Thank You very much

  2. Jim Jones says:

    1. To gain efficient use of capital, would it make sense to use synthetic long options with far out expirations?
    2. Is there any reason these rules wouldn’t apply to any equity?


    • Michael Robinson says:

      Hi Jim,

      Thanks for your questions. The answer to your second question is that tech is a unique field of investing. However, if you carefully apply these rules, you can at times adapt them to other equities. For instance, good fundamentals and strong management are something that you can apply pretty readily.

      As regards your first question, the whole subject of options — whether in the money or deeply out — is not really something that works for this e-letter. The idea here is to help investors build their portfolio with stocks as opposed to options or other ways to invest.

      I hope that help. Cheers and best wishes,


  3. Stanley Swanson says:

    I am looking forward to your pick next week, please let me know you sound like you have it together in your research , hope to do alot of your picks. Thank you, Stan Swanson

  4. Albert Manning says:

    Looking forward to each recommendation. Also would appreciate any
    associated option recommendation with with the stock you ecommend
    if feasible.

    • Michael Robinson says:

      Hi Stanley,

      The reality of the stock market is that you will need a broker to buy and sell stocks for you. However, you in no way need to do business with a traditional broker. You can do your own research, make your own decisions and then have those investments occur with a discount house online. There are several to choose from such as Etrade, TD Ameritrade, Interactive Brokers, Scott Trade and more. You’ll find a wealth of info on the Web if you search for online discount brokers.

      Hope that helps. Good luck,


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