Nowadays, you hear a lot about “quants.” Plenty of “quant” firms have popped up on Wall Street over the years.
I’m proud to say that I’ve been using these methods for decades, and I’m one of the few that’s been able to use these strategies for long-term success, earning me the nickname “The King of the Quants” in Forbes.
The key is that a proven system helps you “stick to your guns” and avoid bubble stocks. Right now, the bubbles that are being pricked right now include stocks with below average performance, such as Zillow Group, Inc. (Z).
The stock hit its all-time high in February. The real estate market was red-hot, and investors were excited after Zillow posted its third profitable quarter in a row, with revenue up over 70% year-over-year in the second quarter.
But the reality is investors had gotten ahead of themselves, and Zillow found itself in a bubble. That bubble was pricked the first week of November, due to the fallout from the company’s failure in its house-flipping business, iBuying. It ended up being a major flop for Zillow, resulting in a nearly $381 million loss in its Homes segment and a write-down of about $304 million within that segment in the third quarter. Ultimately, Zillow was forced to shutter iBuying and lay off 25% of its staff.
As a result, the company’s profitability faced challenges in the third quarter. Zillow achieved revenue of $1.74 billion, with 165% year-over-year growth, but missed analysts’ estimates by $269 million. Earnings per share missed analysts’ estimates by $1.11, with the company reporting a loss per share of -$0.95.
Shares of the company fell by about 35% after the news broke. With only two years in business, iBuying was simply too volatile for Zillow to continue. As the labor market tightened and supply chain bottlenecks sent prices soaring, Zillow’s already thin margins essentially disappeared. Along with the unexpectedly flat housing market, the company simply could not tread water anymore.
Now, my Breakthrough Stocks do not trade at bubble valuations, and tend to benefit from the rotation out of some of the frothy stocks.
Case in point: Inmode Ltd (INMD), which is a nice feather in our cap at Breakthrough Stocks.
As you can see in the chart below, its trading action in the first three months of the year is actually quite similar to Zillow’s. Zillow even surpassed INMD in February for a short time. However, there’s one key difference: It has the fundamentals to back up the stock’s climb higher and keep it moving higher over the longer term.
Using my Portfolio Grader, one of the things you’ll see with a stock like INMD – and won’t see with Z – is recent string of strong earnings. While Z got a “F” there, INMD got an “A.”
My system separates the wheat from the chaff, and earnings, in particular, are the bedrock statistic for this system.
That’s the subject of my event next Tuesday, November 16, at 4 p.m. ET. Be sure to RSVP for the free online event simply by clicking here.
Some of the best in this regard are small-cap stocks like INMD that we discussed earlier. A couple of years ago, IntriCon Corp (IIN), a company that manufactures wearable medical devices, made a particularly big long-term move.
In September 2017, this system’s buy signal triggered when the stock was trading just under $9 a share. But look what happened next:
IntriCon’s share price soared all the way up to $65 over the next 11 months. Meaning anyone who followed my recommendation would be sitting on a 615% open gain in less than a year! A $10,000 investment would yield $61,500 in profits from just one trade.
Similarly, after Hansen Natural, now Monster Beverage (MNST), triggered my buy signal, shares went from $3.96 to $40 before we sold.
This is the single best variable I know for such powerful stock gains.
Don’t miss out on Tuesday, November 16, at 4 p.m. ET, where I will be putting everything together, so you can see exactly how my system works – and how I can make it work for you, too.
Which is why you should mark your calendars… and try to make it to my Webinar event. Simply click here to submit your RSVP for Tuesday’s event.
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
InMode Ltd (INMD)