Eventually, the cream rises to the top. And, when you look at performance, that’s certainly been true with the A-rated stocks I’m finding with my Portfolio Grader.
What makes an A-rated stock? Well, it’s simple. Ultimately we’re talking about 1) solid fundamentals, and 2) strong buying pressure. In other words, are other investors willing to buy this stock – lots of them… especially the “smart money” (i.e., big Wall Street institutions). As for the fundamentals, we also want to see positive trends in sales, earnings, cash flow and the like.
The rewards for investing this way are clear. Since mid-February, the S&P 500 was negative as recently as Monday, while stocks like NAPCO Security Technologies (NSSC) are up +56% for us at Accelerated Profits:
A month after its stellar earnings report, the stock has hit even more 52-week highs, on strong volume. In fact, that’s been the pattern all year from NSSC. There’s been great volume on up days…far more than on down days.
The volume spikes were especially large on the February earnings report (66% better than forecast) and the May earnings report (41% better than forecast). And, of course, more buyers than sellers – and positive earnings surprises – is exactly what we want to see.
I mention all this because it proves that we CAN find great investments – even in this tricky market. You just need a system that helps you spot the signs…just before the price skyrockets.
Let’s look back at a couple other examples of stocks that signaled they were about to liftoff, to see what we can learn.
Buy Signal: March 26, 2014
I said: “The company is best-known for its strong position in the ADHD market, with drugs like Vyvanse, Intuniv and Adderall XR. In the fourth quarter, the company sales rose 12% to $1.33 billion and its operating earnings rose 36% to $2.26 per share compared with the same quarter a year ago. The company also provided positive sales and earnings guidance, and I want to use the recent dip that we’ve seen in the biotech sector as a chance to add Shire to the Buy List.”
Outcome: SHPG ⇧ 68% by July
Industry: E-Commerce – Retail
Buy Signal: January 2, 2019
I said: “Shopify has 600,000 active stores, with merchants in 175 countries. The company’s goal is to help small businesses reach more consumers, and its stores range from makers of handbags to furniture designers. Shopify is also benefitting from the legalization of cannabis in Canada, as there’s been a surge in online shopping for cannabis recently. Shopify has posted an average 211.7% earnings surprise in the past four quarters, so it’s likely to report strong earnings results.”
Outcome: SHOP ⇧ 47% by March
World Wrestling Entertainment, Inc. (WWE)
Country: United States
Buy Signal: Dec. 19, 2017
I said: “WWE boasts more than 650 million viewers across North America, Europe, Africa, the Middle East, the Asia Pacific and Latin America. In the third quarter, the company’s sales increased 13.5% year-over-year to $186.4 million, while operating earnings surged 100% year-over-year to $21.8 million, or $0.28 per share. That topped analysts’ earnings estimates by 20%. For the fourth quarter, analysts are expecting 6% annual sales growth and 90% annual earnings growth. And earnings per share estimates have been revised higher in the past two months.”
Outcome: WWE ⇧ 150% by May
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Where I See the Best Opportunity Now
As I said, I believe in “following the money” – and right now, it’s flooding into elite U.S. stocks.
These are the companies that stand to benefit from huge foreign investment in U.S. equities, the incredible shrinking stock market …and, most importantly, a period of “hypergrowth” – all of which will cause their share prices to soar.
All of the doom and gloom on TV has nothing to do with these companies. It has everything to do with ratings. So, we simply have to look elsewhere if we want to get serious about building wealth.
That’s why I’m laser-focused on fundamentals and buying pressure. It’s how I’ve always been able to find growth with less risk. And it’s how I’m finding great buys today.