The overwhelming majority of economic theories, market forecasts, trading strategies, hot tips and surefire speculations never pan out. Fortunately, we have the accumulated wisdom of history's greatest investors to guide us. I'm talking about people like Warren Buffett, Peter Lynch and John Templeton, individuals whose audited track records speak for themselves. Even though these individuals used very different approaches, they agreed that in the end there is only one thing that dictates where a stock will go: earnings. Earnings are the net profits of a business. They are what ultimately drive share prices. I challenge you to find a single company that increased its earnings quarter after quarter, year after year, and the stock didn't tag along. Conversely, try to identify a single company whose earnings declined quarter after quarter, year after year, and the stock advanced anyway. It just doesn't happen, even in a rip-roaring bull market. The reason is simple. A share of stock is not a lottery ticket. It's part ownership of a business. And just how much investors are willing to pay for those profits will determine what a company is worth in the market. Although there are always bumps along the way, you'll find there is a near-perfect correlation between a company's growth in earnings per share and the movement of its stock from quarter to quarter and year to year. So forget all the technical mumbo jumbo about market breadth, trading volume, put-call ratios, short interest, mutual fund inflows, advance/decline numbers and other market trivia. And instead remember that share prices follow earnings. Period. Stamp that on your forehead - act on it - and you'll be using the one tried-and-true investment discipline that always pays off in the end. Despite economic turbulence and volatility in the markets, there are plenty of companies in technology, e-commerce, food, pharmaceuticals, medical devices, healthcare services, defense contracting, gold mining and other recession-resistant industries that are currently making money hand over fist. Those companies are outperforming. And they're likely to keep outperforming in the weeks and months ahead. In fact, the ingenuity of the scientists at this one tiny company is lifting profits higher and curing cancer at the same time. I'll show you the road map to a potential fortune with this cancer-fighting stock. The firm is growing sales 55% year over year... Its brand-new drug, the first of its kind for ovarian cancer, was given accelerated FDA approval in November... then sold more than $2 million worth of units in just six weeks... And earlier this week, the company released promising late-stage trial data on the drug. The stock jumped 144% in a single day. But there's still plenty of room for this company to run... After all, there are four more drugs like this in the company's pipeline. Go here for the full details. Good investing, Alex |
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