Best stocks to invest in
It’s not every day that a service or product really changes the way things are done in an industry…but when they do, those are the stocks to own. Turning a business on its head and shaking things up isn’t quite what I am talking about; it’s more about the companies that turn many other companies on their heads!
The services and products that have shaped our economy were all new and questioned ideas at one point. Few, if any, could have predicted the incredible changes the internet brought, but with it came ideas that seemed like science fiction only a few years earlier.
The game changers are not the ones that give you what you want, they give you what you need next. By staying one step (or many) ahead of the demand, game changers deliver more than a service, they are the stocks that dreams are made of.
The Big Gap Up
One way to locate a game changer is to investigate those big pops. Stocks shoot higher for many reasons, but people know a good idea when they hear it. Oftentimes a game changing play will be met with a big move as soon as the story hits Wall Street.
The pops can come from press releases that announce the new product or service. But usually it’s a live announcement of that new service or product. Whether it’s at an investor conference or analyst day, the big ideas come with a touch of fanfare. The best showmen CEOs turn those events into spectacles.
Earnings conference calls can give the much-needed details behind a new product’s capabilities or the expected launch date. Listening to the analyst questions and management’s answers are critical to gathering the correct information.
MORE . . .
These Stocks Are Game Changers
Did you miss Apple, Google, eBay, and Tesla in their early stages? Today Zacks is targeting a handful of companies that are at the forefront of technological innovation. Their potential stock gains are off-the-charts as they create new industries or shake up old ones and drive competitors out of business.
They can also make early investors very wealthy. Don’t wait to see these breakthrough stocks. Plus, until Saturday, March 12 you are invited to download our newly-released 2016 IPO Watch List. This special report spotlights 5 of the fastest growing tech companies in the world.
Look Into These Game Changers Now >>
Confirmation is Crucial
One of the factors that can serve as a confirmation of a game changer is an increase in equity research coverage. I like to see coverage from several small brokers along with a few anchors from the bulge bracket.
These smaller brokers confirm the thesis and while they offer investment banking services, they are not at the top of the list for secondary offerings. Their coverage can be a validation for that very reason. The analyst generally isn’t instructed to cover the company. They want to cover the company because they know their client base on the buy side will be interested in the story.
Along with the idea that more eyes see more things, the expansion in coverage also brings other benefits. A deeper field for the consensus will allow for a more accurate earnings estimate, and will also get the story out to the widest possible audience.
Don’t Be Too Early
Many believe that you have to be in on Day 1 to get the maximum return. That is to say you need to buy the IPO or be in just after a “game changer” opens for trading. This idea is severely flawed.
There is no stock that has just moved higher after coming public. It is only a matter of common sense to know that stocks move up and down. Armed with this knowledge, one should not chase the latest and greatest stock the first day it opens unless you are gunning for a short term trade.
Inevitably, the stocks that start off too hot are the ones that will languish for 6-12 months in a stand still position. This is clearly not what investors want to see.
The Rewards of a Game Changer
You can throw out the handbook on how to value a security when you have a game changer on your hands. These types of plays know only the rules of supply and demand. Generally speaking there is very little of the former and a whole lot of the latter.
Multiples tend to soar, sometimes due to expected earnings and sometimes just due to the stock price movement. Either way, don’t expect a game changer to trade “in line” with an industry average. Look for the game changer to trade at a multiple of the industry average…many times more than the average stock.
Few game changers can continuously disrupt industries. When they do, you have to hold that stock for a very long period of time. Most game changers see a swift ride to prominence and fame…but eventually, the shine loses its luster. The key idea here is not to be married to these ideas and be willing to take down gains as the stock moves higher.
Starting Your Search
If you are interested in the rare breakthrough companies that are also priming for stock price breakouts, you might want to look into the trading service I’m directing: Zacks Game Changers.
For more than 15 years I’ve specialized in the exhaustive work of tracking technological developments and the companies that are likely to profit from them. Game Changers combines this analytical research with Zacks Rank and other signals that indicate when to buy, when to sell, and when to ride in pursuit of exceptional profit.
If you want to learn more about these stocks – and more importantly, have the opportunity to buy them before they shoot through the roof – now is the time to check out Game Changers.
As a special bonus, we’re giving away our newly-released 2016 IPO Watch List for new investors. This special report spotlights 5 of the fastest growing tech companies in the world. Each of them could go public this year and those who buy shares early could see prices skyrocket very quickly. Don’t delay – the 2016 IPO Watch List is only free until Saturday, March 12.
Learn more about Zacks Game Changers now >>
Brian Bolan is our aggressive growth expert and one of the hottest hands at Zacks who specializes in double-digit stock gains. He is the editor of the Zacks Game Changers portfolio.
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