10 Revolutionary Stocks
Investor Sentiment is Heating Up
Over the past 10 weeks, I’ve profiled 10 revolutionary stocks here, describing how each one has the potential to yield very large profits for investors who buy early and hold for the long term.
The goal is simple—to get you into the next Apple, the next Amazon and the next Netflix—stocks that can make you rich if you buy early and hold patiently.
To recap, here are the 10 stocks.
Alibaba (BABA) – Poised to be the Amazon.com and eBay and PayPal of China
Centene (CNC) – Providing healthcare services to uninsured and under-insured individuals, and thriving thanks to Obamacare
GoPro (GPRO) – The leading supplier of digital video cameras that can be mounted on anything
Hain Celestial (HAIN) – The leading distributor of organic and natural food products
Illumina (ILMN) – The leading provider of tools for genetic analysis and research
LinkedIn (LNKD) – The leading business network, enabling employers and potential employees to find each other.
Solar City (SCTY) – The leading installer of solar energy systems, aiming to be the biggest electric utility in the U.S.
Stratasys (SSYS) – A leading manufacturer of 3-D printers
Tesla Motors (TSLA) – The leading manufacturer of electric automobiles
Zillow (Z) – The leading provider of online real estate information and services
Since these 10 stocks were recommended, six are up and four are down, but that’s short-term—and these are long-term recommendations.
So here’s what I want to know.
Did you buy any of these stocks? Did you already own any of them? Was there something about any of them that turned you off?
We’ve created a brief survey about these 10 stocks, and if I get enough useful data (or interesting opinions) from your answers, I’ll share them with you next week!
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Investor Sentiment is Heating Up
One of the many market truisms is that bull markets climb a wall of worry, and that once there is no worry, it’s time to sell.
The best time to buy stocks in the past decade was February 2009, when the degree of investor worry was off the charts, thanks to an imploding economy and the prospect of failing banks.
The best time to sell (presumably somewhere in the future, if not now) will be when GDP growth is healthy, unemployment is low and investors are enthusiastic about earnings growth at a wide variety of companies.
Of course, these highs and lows of sentiment are not precisely measurable. And every market top and bottom is different from the last. (The market rhymes, but it doesn’t repeat.)
Still, one of the things we do here at Cabot is stay alert to the tertiary signs that drive investor sentiment.
Most recently, for example:
Wal-Mart announced that it will boost its minimum wage to $10 per hour, signaling a tightening labor market.
The automobile industry just posted its sixth consecutive year of growth, and now low gasoline prices are enabling increased discretionary spending in a variety of other industries.
And Americans’ level of satisfaction regarding the economy is at its highest level in the past 11 years.
Clearly, sentiment is good. But how good?
Here’s a chart created years ago by Sy Harding, an expert advisor on market timing, correlating investor sentiment with market phases. It’s worth studying—even saving.
1.Can’t have a bull market with conditions this bad.
2.Just a temporary rally. I’m holding my short sales.
3.They’re not fooling me again. I’m not believing it.
4.My neighbor says he’s making money. I’ll put my toes in.
5.What’s this? I made a profit. I’ll buy a little more.
6.This is easy. I need to double up with margin.
7.Hey, I’m getting good at this.
8.P/Es high? P/Es don’t matter. That’s old-time thinking.
9.This time is different. Bull market will last 10 more years.
10.A serious bear market due? Dumb. It’s a new era.
1.Can’t have a bear market with conditions this great.
2.Buy the dip! Buy the dip!
3.It’s down 20% What a buying opportunity!
4.I’m not worried. The market always comes back.
5.This is killing me. But this rally should end it.
6.Scandals? They cheated us?
7.That’s it. I’m moving to real estate.
8.It’s all about P/Es. They’re still way too high.
9.This time is different. Downturn will last 10 years.
10.A bottom is possible? Are they nuts?
Today we’re in a bull market which is six years old, and it seems to me that we’re somewhere between phase 5 (I made a profit. I’ll buy a little more) and phase 7 (Hey, I’m getting good at this), and thus there’s more room to go before the ultimate peak.
This doesn’t mean there can’t be major shakeouts before then; the December shakeout, for example, was a doozy. But in general, this chart reminds us that there’s more upside ahead in the long run, and thus aggressive investment (in the right stocks) is still likely to bring rewards.
So what are the right stocks?
Not oil stocks, to pick one obvious sector that bottom-fishers are looking at.
In the later phases of a bull market, the right stocks to own are the leaders, the stocks of growth companies that investors are piling into because they see great growth in revenues and earnings down the road. One that’s been on my Watch List for quite a while is Regeneron.
Regeneron is a large, diversified developer of drugs that treat eye diseases, inflammatory diseases and cancer. These include colorectal cancer, LDL cholesterol, rheumatoid arthritis, asthma, dermatitis and nasal polyposis. But the big moneymaker for the company is Eylea, an injected treatment for wet age-related macular degeneration that was approved in late 2011. Regeneron is very well known; more than 1,000 mutual funds own shares of the company. But they’re still piling in, and last week the stock spiked higher when a study of 660 people with diabetic macular edema (which leads to vision loss) saw Regeneron’s Eylea outperform the drugs made by Roche in patients who started the trial with vision of 20/50 or worse.
REGN has been in consolidation phase since topping 430 back in December, and this positive news has ignited a buying move that I think has the potential to push the stock out to new highs—if not immediately then eventually. A low-risk way to play it, in fact, would be to buy here and keep a tight stop, somewhere between 410 and 420.
Even better would be to become a regular reader of Cabot Top Ten Trader, which first recommended REGN in 2006 and has recommended it 17 more times since then. Click here to learn more.
Note: Don’t let the high price of REGN scare you away! It doesn’t mean it’s too late. All it means is that you need fewer shares to achieve your “typical” investment size. You do have a typical investment size, don’t you?
Yours in pursuit of wisdom and wealth,
Chief Analyst, Cabot Stock of the Month
Publisher, Cabot Wealth Advisory
Related Article: BEST REVOLUTIONARY STOCKS