I sure hope you followed my Golden Rule of Turnarounds.
When we spoke back on Jan. 8, I told you in no uncertain terms that no company can cut its way to growth.
And remember, a big part of crushing the market in high tech is to find best of breed firms with solid growth potential.
I’m bringing this up because there was a low-priced telco stock I warned you to stay away from in 2019, if you wanted to protect your hard-earned money.
I did that because I feared you would hear a lot of buzz about the “turnaround” underway at Windstream Holdings Inc. (Nasdaq:WIN).
So, let me ask you this: Would you pay money to get on an elevator that drops 15 floors in a matter of seconds?
Please don’t think I’m being flip. I use that metaphor because from an investment standpoint, that was what you got with Windstream – the stock recently dropped more than 61% – in a single day.
And on Monday, the firm filed for bankruptcy protection after losing a legal battle with hedge fund Aurelius Capital Management over bond covenant violations.
Shareholders will be wiped out.
By contrast, while Windstream was crashing, members of my Nova-X Report owned a tech leader that soared more than 30% on Feb. 22.
Let me show you why my Nova-X folks made out like bandits, while WIN investors were crying in their beers…
A Bad Fall
Now then, before I go into more details on the differences between these two stocks, let’s put the drubbing at Windstream into some perspective.
That 61% decline in a single session means you would have seen that stock lose nearly 9% its value every hour the stock traded. Even worse, WIN dropped another 26% on Feb. 21 and more than 10% on Feb. 22.
From the time we spoke on Jan. 8 till the time the stock hit bottom on Feb. 22, it lost a total of 84% of its value. On Wednesday, the stock was in another tailspin, dropping more than 25% before the close.
Here’s why it fell so far so fast…
Windstream made a classic mistake. It borrowed heavily to a buy up a string of local telecom service providers. Trouble is, each of the acquired firms faced sharp and growing competition from much larger national rivals.
In effect, Windtsream overpaid for assets that would go on to have little value.
The firm’s total debt grew from $8.6 billion in 2014 to $10.4 billion by the third quarter of 2018. We don’t even know how much debt the firm had year-end, as Windtsream has decided to hold off delivering a fourth-quarter report.
We do know that the firm was doling out more than $230 million each quarter to pay interest on its debt. And it now the nearly $1 billion annual interest bill is simply too much for the firm to handle.
Here’s what I told you early this year: “Right now, the firm is doing what it can to make a better impression with investors by attending a wide range of conferences and selling assets to stay afloat. And a few media outlets and Wall Street analysts will tout it as a potential turnaround story.”
And as I added: “Don’t believe the hype.”
A few months later, any hopes of a positive spin are dashed, with shares having a 100% downside from here – to zero.
A Digital Ad Giant
Meanwhile, subscribers to my Nova-X Report are wisely profiting from investing in well-run firms that face very bright futures.
In fact, one of the portfolio’s freshest picks soared 30% in just one day.
This is a firm that I call “an early innings disruptor.” Its sales are poised to grow more than 30% this year as it rides herd on the powerful shift underway in advertising.
By the end of this year, eMarketer thinks firms will spend nearly $130 billion on digital ads, compared with about $110 billion on traditional advertisements. And by 2023, two-thirds of all ad spending will go toward digital ads.
We own the best firm in this field, which operates an end-to-end media trading platform that matches buyers and sellers. Just as important, after heavy years of investment, it’s becoming a profit powerhouse. Look for adjusted earnings to grow at a mid-20% clip this year and next, and reach $250 million by next year.
The recent one-day gain means that Nova-X readers are now holding 46% gains – and in less than a month.
Now, if you’re looking to catch hold of another fast moving tech trend that’s anticipated to create some $12 trillion in brand new wealth for savvy investors – I don’t blame you.
I’m talking about 5G. You’ve probably already heard a bit about this technology. Whatever you’ve heard, I can tell you for certain, it’s about more than just about upgrading your smart phone.
A whole lot more.
It will have a massive and unrivalled impact on society, impacting everything from healthcare to housing, transportation to energy consumption, policing, national defense, banking, the stock market, airlines… on and on.
The pipeline to the 5G revolution is being built right now as I type, and those who stand to make a fortune on this build out have to get in now.
That’s not the only big Nova-X winner… not by a long shot.
Our members regularly crush the market.
For example, we’re approaching the one-year anniversary mark with a fast-growing provider of collaboration software technology that has already handed us 93% gains.
We’ve also quadrupled our money in less than two years with a firm that is helping powerful communications apps into leading website homepages.
One of our cyber defense picks is already up 50% since last summer.
We also own one of the leading artificial intelligence (AI) firms that is helping clients deploy this forward-facing technology throughout their operations. We’re holding 47% gains with this pick – and in less than four months.
So, if you want to really build your net worth, please consider subscribing to my members-only Nova-X Report. Click here to do so.
But don’t worry. If you’re not quite ready for a low-priced paid service, then continue to check back with me here often. That way I can share my tips and tactics for crushing the market with high tech.
And I’ll also tell you which “Dogs of Wall Street” to avoid.
Cheers and good investing,
Michael A. Robinson