Finding One Dow Stock to Beat the Market in 2015

Friday, December 05, 2014 Finding One Dow Stock to Beat the Market in 2015   by Jamie Dlugosch   The index investor frauds will have you believe that picking stocks that beat the market is a fool's game.   Nonsense, I say.   Stock-picking is still the far superior investment strategy for any portfolio, assuming one can pick the right stocks.   It's not as hard as you might think.   One of the most important things to do when picking stocks is to narrow your scope. When the entire market is your universe, it is much harder to find the one stock that will beat the market.     FURTHER READING The One Company Behind Every Smart Phone   Apple is expected to move over 80 million iPhones to market by the end of the year. We love Apple... yet we're recommending a much less known company today.    Because this company provides the technology that makes every smartphone possible. Without this tech, Apple's most hyped iPhone would be just about worthless. What we like even more – shares of this company go up five times higher than AAPL shares... every time Apple launches a new iPhone.     Click here for the full story.     Limit your scope and you greatly increase your odds of success.   It's the law of averages personified.   One of the simplest ways to find a stock to beat the market is to target the Dow Industrial Average.   This antiquated  but indelible index is fertile ground for picking the one stock that will beat the market.   The Dow is made up of some of the largest capitalization stocks. A buyer of any Dow stocks is swimming in a pool of the largest money managers in the market.   And the psychological makeup and actions of those managers is about as easy to read as a kid caught with his hand in the cookie jar.   Essentially in your quest for one stock to beat the market in 2015, you  only need to understand where these rather simple thinkers will gravitate in the coming year.   Given that the assets under management are so large these managers tend to be risk-averse, but they are also paid to make money in a portfolio. Thus growth is still an important part of the equation when understanding exactly what these folks will buy rather than sell.   On the growth front, what is most needed is a compelling story. Something that is believable. It need not be complex, in fact the simpler the better.   In surveying the stocks in the Dow for safety and a believable growth story, most stocks are eliminated out of hand.   Decent growth is going to be hard for any large company to find, but there is one Dow stock that offers a compelling story that will likely attract enough buying to propel shares to heights well above market averages in the coming year.   That Dow stock is Microsoft (NASDAQ: MSFT).   A day after the company held its annual shareholder meeting, Nomura Securities analyst Rick Shurland reiterated his buy rating of Microsoft.   The story is simple and compelling.   A new management team poised to lead the company to new heights focusing on the vast opportunity that is cloud computing.   In the simple world thinking of large-cap stock asset managers, Microsoft is about as perfect a story as you can find.   The potential for P/E expansion is real as buyers flock to the stock.   In addition, huge cash flows can support additional borrowing that, in the eyes of Mr. Shurland, can be used to buy back stock.   In essence, you have everything you need from an investing perspective to generate market outperformance.   Probably most attractive is the fact that you are unlikely to lose much money, and more than anything that's what the big boy money managers want most.   In Microsoft we have a stock that is poised to be a big winner and demonstrates how simple it is to pick the right stocks instead of mindlessly following some lame, outdated index that will only ensure mediocrity.   Jamie Dlugosch Editor Investor Research Institute   To Read More From Investor Research Institute Click Here
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