Archive for September, 2013
If you want to learn how to double your money investing in high-tech stocks, take a few minutes to understand the catalysts driving Tesla Motors Inc. (NasdaqGS: TSLA), the electric carmaker whose shares are up 457% so far this year – including a recent five-day surge of 52%.
Back on May 8, Tesla stunned the markets: It not only announced its first-ever quarterly profit, it reported a bottom-line figure that was three times what analysts had been forecasting.
The next day the stock jumped 24% on massive volume.
And that was just the start.
Since that earnings report, Tesla’s shares have zoomed from $55.79 to $188.64 – a stunning gain of 237%.
The share-price surge was supercharged by a second earnings “surprise,” another set of better-than-expected results that the carmaker reported Aug. 8.
As someone who’s been watching this very closely, I can tell you that this impressive run has confounded short-sellers, transformed company CEO Elon Musk into a business rock star and given Tesla the kind of cult-stock status that Apple Inc. enjoyed during the Steve Jobs era.
And now that I’ve recounted it here, the Tesla-share-price saga has achieved one other result – one that I consider to be very valuable.
It has educated you.
You see, you’ve just been introduced to the concept of a stock market “catalyst.”
Think of it this way: If every stock houses a rocket engine that sits cold, dormant and quiet until something ignites it, then a catalyst is the match that lights the rocket’s fuse.
And we all know what happens once a rocket engine fires.
What’s really great is that – even after the rocket engine on a stock is ignited – you still have time to buy the stock and hop aboard for the wild ride higher.
And that means that a catalyst is also a kind of early warning signal telling us that there’s lots of money to be made in a particular stock.
There are several types of catalysts, and today I’m going to show you my favorite ones.
I’m also going to show you a couple of stocks that could be looking at Tesla-like “liftoffs” – thanks to the catalyst events that I’m going to tell you about now.
First, it was the mess in Syria.
Then we had to deal with the whole Team Bernanke “taper drama.”
And now we’re barreling into yet another “Fiscal Cliff” street fight.
With U.S. stocks trading at unsustainable highs, I can sympathize with those of you who look at these headlines with fear; you view each day’s events as just the latest potential investing calamity, and worry they might ignite a single-day sell-off severe enough to eviscerate years of diligent saving and personal sacrifice.
I can even understand why many of you would like to scamper to the supposed safety of the sidelines.
But don’t do it.
The sidelines, you see, aren’t as safe as you might think. Missing the good days can be worse than riding out the bad ones. And you run the very real risk of getting left behind: 57% of American investors don’t even have $25,000 to their name.
But there’s a way to stay invested – to keep pursuing the life-changing profits that the “right” tech-sector stocks can deliver – even as you muscle aside the painful gut punches that today’s volatile markets can inflict.
I’m going to tell you about it today.
And I’m even going to show you the one stock that will let you put this “Fiscal Cliff” defense strategy to work.
I’m going to let you in on a Silicon Valley secret.
It’s a secret that the leaders of the U.S. tech sector guard very closely.
And I only know about it because I regularly talk to the senior industry executives as I make my rounds out here.
The leaders of the top tech players out here each maintain a “watch list” – in essence, a ranked short list of companies that they’d one day like to buy.
These “target companies” share a lot of qualities. They’re all well-run, offer great products, generate excellent cash flow, and are either very profitable now, or have the potential to be in the not-too-distant future.
These “short-list” companies are so good, in fact, that once they’re purchased, they immediately bolster (are “accretive” to) the suitor company’s bottom line.
If those characteristics sound familiar to you, it’s with good reason.
You see, those are essentially the qualities that I’ve repeatedly detailed for you in my list of Five Wealth-Building Rules for high-tech investing.
And today I’m going to show you some great examples of “watch-list” companies that turned into mega-deal buyouts – and demonstrate how you can set up your portfolio to grab a share of these tech-sector windfalls.
And the profits are huge: One recent deal actually netted investors a single-day windfall of 36%…
As I’ve told you a number of times here over the past few weeks, I have an upbeat view of the tech markets and believe there’s a lot of money to be made between now and the end of the year.
But given how far U.S. stocks have come, there’s also nothing wrong with being a little careful. And if you’re one of those investors who are worried that bullish sentiment could disappear like a puff of smoke on a breezy day, the Holy Grail is a stock with a “margin of safety” built in.
This is a conversation worth having on a day like today, when U.S. central bankers may tap the brakes on a monetary-policy program that’s sent American stocks to record levels.
Investing icon Warren Buffett used to define a “margin of safety” as a company that was trading at close to “breakup value.”
That metric doesn’t work as well today – especially in the parts of the tech sector that we like to focus on: You just aren’t going to find many high-growth companies trading at bargain-basement levels.
But with U.S. firms sitting on a record $1.7 trillion in cash, you can find some name-brand tech firms whose cash reserves can cover a decent portion of their share price – creating a nice “margin of safety” as we move into the fall.
I like to refer to these as “Cash is King” tech stocks.
We’ve already found several of them for you – and they are stunningly cheap.
When trees start falling, it’s a good bet that stock prices are headed higher – especially in the tech sector.
Before you start worrying that I’ve taken leave of my senses, let me assure you that there is a method to my apparent madness.
And the ultimate objective of this exercise is to put money in your pocket – first by predicting where the U.S. economy and the American tech sector are heading in the final few months of the year … and then by pointing to the specific investments that I believe are destined to crush the broader market returns.
I know that’s a pretty ambitious set of goals, so we’d better get started.
And I’m going to begin by telling you a story that will show you one of the most bullish “Buy” signals I’ve seen in a long time.
Indeed, once you understand this signal, you’ll see why I believe the final 109 days of this year will be some of the most profitable tech investors will see …
A lot of folks will insist that there’s no better feeling than when you make a big profit on an investment.
But I believe that the best feeling of all is when you can make a hefty windfall on an investment – and actually help society while you’re doing it.
I was thinking about this late last week as the new NFL season got underway.
Over the last couple of years, as you know, the whole concussion issue has been a big one with the league. In the face of a potential multi-billion lawsuit involving 4,500 current and past players, the NFL commissioner’s office has been massaging the rules to better “protect” players (and especially quarterbacks).
Just days before the season opened, the NFL agreed to pay the plaintiffs roughly $765 million.
That ended this particular lawsuit. But it doesn’t solve the concussion problem, which has become an issue of national concern – not just in pro football, but also in the high-school and recreational league sports that many of our kids play.
The answer to this problem going forward won’t come from more lawsuits, or from absurd rules changes by backside-covering leagues.
It’s going to come from the technology sector – and from two trillion tiny devices that can make you rich.
If you blinked, you might have missed it.
Last week, ARM Holdings PLC (Nasdaq ADR: ARMH) – one of the world’s dominant mobile-device chip companies – said it bought a small Finnish software startup called Sensinode Oy in a deal whose price wasn’t reported.
I’m betting that most folks either missed the announcement – or shrugged it off as just another of the thousands of below-the-radar deals that companies do every year.
But I knew differently.
I knew that ARM’s buyout of Sensinode is the latest reminder that the single-biggest profit opportunity currently on my radar screen is ready to start paying off.
And because we’re talking about a $14 trillion profit opportunity – meaning this newly emergent tech market will actually approach the entire U.S. economy in size – I wanted to make sure I kept you in the loop.
I’m even going to show you the top profit recommendation that I’ve identified…