Food for thought as to how many "Sparks" will we fit into?
Spark #1: Game-Changing New Contracts
A little company that secures a large, new contract with a key customer can see its stock really take off. The contract can come by way of a larger private-sector customer or a public sector contract with a government entity… at the end of the day, it doesn’t matter where the contract comes from. What does matter is the scale of the contract relative to the company’s existing sales.
Spark #2: Management Upgrade
Public companies must report changes in management – and that information is hugely valuable for investors. Sid makes it a point to see who has the chops to lead and succeed by digging up their resumes and studying how they fared in previous positions of power. He’s looking for stocks that may jump on the news of a management change – and if the management change can lead to a successful turnaround, that’s even better.
Spark #3: Disruptive Technology
Sid is always on the hunt for the latest viable technological, medical, or special niche product that has the ability to either change the world or support a macro trend that is changing the world.
Spark #4: Upward Revenue and Earnings Revisions
Revenue and earnings sparks are about more than just beating analyst expectations. Sid’s analysis has determined thatupwardly-revised guidance has a much bigger impact on a stock’s move. These upward revisions can come from Wall Street analysts, which is good. But upward revisions that come directly from the company itself can really light the fire under a company’s stock too.
Spark #5: Institutional Interest
You know a company has started to hit its stride when institutional investors start gobbling up outstanding shares. Mutual funds, hedge funds, exchange-traded funds, and pension funds… these are the guys that make the market – by deciding where the next hot sector will be. And once they “tip their hand,” it’s usually just a matter of time before the media breaks the news and regular investors pour in. Sid gets there first. He identifies the tell-tale signs of initial institutional interest through published data, well before others spot it.
Spark #6: Sector Rotation
Money is always in flux. It flows from one sector or asset class to the next. Sometimes these moves are quick and violent. Sometimes they can last for years. Sid’s suggestions may become more concentrated in one particular sector (like biotech and energy), but that just means Sid’s analytics have identified an existing opportunity or even an upcoming opportunity that is currently off the radar.
Spark #7: Returns
Until a stock starts to perform, it’s merely tying up capital in your account. That’s why Sid always looks for stocks that have already demonstrated favorable momentum. That momentum could be over a long period of time, where a stock continues to hit new highs – or it could be over a short time frame, when a stock demonstrates a breakout from a base. In both cases, we’ll be looking for increasing volume on the move. That lets us know we’re not alone – and it also gives us hints as to possible institutional interest. And as I said above, the party really gets started once institutions start piling in.
Multi-Catalyst Event
Well it looks like we still have time to accumulate, on the cheap, as #5 is at least a year away. However, we hit or will be under the umbrella in most of the points being made with the criteria for a stock to run. One other point I think should be noted with this technology that makes it stand out from most, except the drug industry, is the lack of investor choices to put their money in. The parallel to the drug stocks is when a new block buster drug comes out, that pharmaceutical company runs like crazy. I think we are set up for the same type of scenario. So hold onto your hats because when the ride starts it is going to be a crazy, insane ride!
Hope the Holiday Season brings some joy to all of you.
Bill
