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Pounce on the Opportunities!

Last year’s stock market produced an investor’s dream. It climbed steadily almost every week of the year.

Stock Price Correlation Coefficients

Advantage of Price Fluctuations and Super-Computers

IntercontinentalExchange (ICE)

Stock Price Correlation Coefficients

Last year’s stock market produced an investor’s dream. It climbed steadily almost every week of the year. Even better, many investors beat the market by a wide margin. But some investors failed to score big gains, which they found frustrating. Hedge fund managers, for example, failed miserably. Why was there such a divergence in performance among investors with good results and those without?

For the first time in many years, most stocks fluctuated considerably more than the Standard & Poor’s 500 Index. According to Barclays, the daily fluctuation between the 50 largest stocks in the S&P 500 and the Index itself in 2013 reached the highest level since 2007. What is the advantage of higher fluctuations like we experienced in 2013? If you pick the right stocks, you can outperform the stock market averages by a wide margin.

Fluctuation trends (or correlation coefficients as math geeks call them) tend to continue for several years. If your system of choosing stocks worked well in 2013, stay with your system: it will likely produce good results in 2014, as well.

Advantage of Price Fluctuations and Super-Computers

One of the biggest factors contributing to larger stock price fluctuations is the trading created by super-fast computers. These computers are programmed to identify price trends and news items. When they recognize what they think is a bad trend or bad news, they immediately start selling stocks without intervention from humans. The massive buying and selling creates sharp fluctuations and leads to opportunities for buying and selling by individual investors.

Should you follow stock price movements second by second to find when super-computers are making mistakes? Absolutely not. I have developed a reliable system to figure out what a company is truly worth. I call it my Maximum Buy Price. When a good quality stock drops to my Max Buy Price, without any consequential news, I recommend the stock to my subscribers. Then when the super-computers drive the stock to unsustainable heights, without good reason, I recommend selling the stock at the higher price. It’s easy to take advantage of large stock price fluctuations and super-computer effects when you know what a stock is truly worth.

My subscribers are delighted!

At the beginning of 2013, I chose Kroger Co. (KR) as my #1 pick for 2013. The stock surged 50.7% before I switched to Trinity Industries (TRN) in July. During the remainder of the year, TRN advanced 42.9%. My compound return (and that of my subscribers) for the year was 115.4%, which easily beat the S&P 500 gain of 29.6%. In fact, my subscribers’ average gain for all stocks sold in 2013 was 51%! My subscribers are delighted!

Most of my winning stock picks have several factors in common. The most important factor is that I only choose undervalued stocks selling at or below my estimated Maximum Buy Price. When the super-computers over-react, my subscribers are ready to pounce on the opportunity. Buy low and sell high: my system works!

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In the above script, I have boldly referred several times to “my subscribers”. I am referring to subscribers to my Cabot Benjamin Graham Value Investor. In case you haven’t guessed, I’m proud of how the Investor has evolved during the past 11 years, since its inception. The Investor isn’t your typical investment letter, which usually includes only a few recommendations and is sent to you monthly.

The Cabot Benjamin Graham Value Investor includes a 12-page issue with 16 conservative buy recommendations and a listing of 275 of my favorite stocks with recommended buy and sell prices. The Investor also includes an eight-page issue, sent one week later, which contains an additional 16 buy recommendations that are slightly higher risk and have greater appreciation potential.

That’s not all. The Cabot Benjamin Graham Value Investor also includes my highest-rated 275 top stocks shared on the Cloud, ready for you to update prices and sort the many columns of data so that you can analyze 275 stocks using your own criteria.

And there’s more! Later in each month, I send out an update which includes the latest news and earnings reports for all of my current recommendations. Lastly, I offer a unique opportunity for you to send me emails with your questions. I’ll personally answer all of your investing questions.

All of the above is available at a ridiculously low price. Click here to take advantage of our generosity and the best investment advice on the planet!

Here’s a few of the stocks that provided great returns for my subscribers in 2013:

CVS UP 53%
Disney UP 107%
EBay UP 89%
Exxon Mobil UP 64%
Google UP 233%
Johnson & Johnson UP 52%
Kroger UP 56%
MasterCard UP 165%
TJX UP 133%
Wal-Mart UP 46%
Walgreen UP 68%

Invest with the best. Click here to get started today.

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One of the high-quality stocks I have been recommending to buy lately is a company that has a strong balance sheet, pays a good dividend, acquired a competitor at a bargain price, and is growing rapidly.

IntercontinentalExchange (ICE 208.89)

ICE owns and operates the leading worldwide electronic marketplace for trading futures and over-the-counter (OTC) energy and soft commodities contracts. The company’s primary products include crude oil and natural gas contracts, and various soft commodity futures contracts such as coffee, cocoa, sugar, corn, wheat and fruit. In addition, the company provides clearing services for credit default swaps (contracts which guarantee the principal amounts of loans, mortgages, or bonds).

In November 2013, InternationalExchange completed the $11 billion acquisition of NYSE Euronext. The purchase nearly triples its revenues and will add to earnings immediately. Cost synergies and streamlining will help earnings per share to jump 75% by the end of 2015. More recently, InternationalExchange purchased the Singapore Mercantile Exchange with the objective of expanding into Asia.

IntercontinentalExchange is now the leading network of exchanges and clearing houses for financial and commodity markets with 18 exchanges and six clearing houses. Growing demand for innovative new products for OTC trading and oil futures contracts bodes well. Robust transaction and clearing activities will benefit ICE as institutions encounter new regulatory guidelines.

ICE shares are somewhat expensive at 24.7 times current EPS, but EPS are forecast to rise 17% per year during the next five years. The balance sheet is very strong with low debt and $24 per share of cash available to fund future needs. ICE’s dividend, recently initiated, provides a 1.2% yield. I expect ICE shares to advance to my Min Sell Price within one year. Buy at the current price.

Until next time, be kind and friendly to everyone you meet.

Sincerely,

J.Royden Ward
Award-Winning Analyst, Cabot Benjamin Graham Value Investor

Editor’s Note: You can find additional stocks selling at bargain prices in the Cabot Benjamin Graham Value Investor. In every issue, you’ll find my legendary Maximum Buy and Minimum Sell Prices for over 275 stocks, including IntercontinentalExchange. Take advantage of other investors’ mistakes. Click here to get started today!

J. Royden Ward has spent his entire career seeking strong investment returns for his clients while keeping risk low. In 1969, he developed a computerized model of stock selection based on formulas created by investment legend—and Warren Buffett mentor—Benjamin Graham, and since 2003, he’s been spreading his wisdom far and wide as chief analyst of Cabot Benjamin Graham Value Investor.