Want to know how to consistently profit during even the worst market conditions? I’ll give you a hint: It’s not through speculation, penny stocks or even parking your money in low-earnings securities. I’ve never been a fan of get-quick-rich schemes that take advantage of investors’ fears during the down times. So over the past few decades I’ve made it my mission to help people make money the old fashioned way…
Here’s my million-dollar secret: The only way to profit in this market is to take a hard look at the numbers behind the stocks so you can invest in the biggest, strongest companies that will emerge from bear markets stronger than they were before. It turns out that most of the battle is knowing what makes a company strong. And after years of crunching the numbers, I’ve figured out the eight most important variables that help predict a company’s profit potential—what I call my eight Wealth Building Keys.
In this special report I not only go over these eight fundamental variables; I also give you eight of my top small- and mid-cap picks that you can buy to profit no matter what the rest of Wall Street is up to. I’ll also point you to two dozen big names on Wall Street that are doing an excellent job in staying fit and trim fundamentally. Without further ado, let’s get started…
Key #1: Sales Growth
This is one of the hardest numbers to fake. Sales are the lifeblood of any business—whether it is selling a service, a gadget, raw materials or anything else under the sun. There are many ways that companies can temporarily find capital, such as selling off assets or making outside investments, but it’s always bad news if people aren’t buying what a business is selling. Great companies make sure that sales increase month to month and year to year so they can expand, dominate their industry and deliver big returns to shareholders. Click here to see my top three stocks by sales growth.
Key #2: Operating Margin Growth
Making profits is all about the margin—the difference between production costs and the retail price. A company that’s able to expand its operating margins is usually a company that has a dominant position in its industry. This company can raise prices without seeing a drop-off in sales. That’s a nice place to be. But if a company has to keep cutting prices to entice reluctant buyers, it’s not a good sign. Click here to see my top three stocks by operating margin growth
Key #3: Earnings Growth
Earnings growth is the heart of all good financial analysis. Simply, “earnings” is just another word for “profits.” This is a deceptively simple idea that is too often overlooked. The mainstream media is always finding excuses why a company didn’t post bigger profits—consumer spending was down, a key contract fell through, you name it! But I’m not in the business of making excuses. I’m in the business of finding companies that are posting bigger profits no matter what the rest of Wall Street is doing. As long as any company is vital and able to grow its earnings consistently, its stock will do well. Click here to see my top three stocks by earnings growth.
Key #4: Earnings Momentum
While earnings growth is important, I also want to see a company’s rate of growth increase. This is what I refer to as Earnings Momentum. If a stock has shown that it is making more and more profits every quarter, it’s logical to think more of those profits will be returned to shareholders. But if a business is seeing earnings shrink or dip into the red, I do not consider it to be a good investment. Click here to see my top three stocks by earnings momentum.
Key #5: Earnings Surprises
One key metric I closely examine is whether or not a stock is consistently beating analysts’ estimates. Beating estimates is called an “Earnings Surprise.” I measure these as a percentage, calculated as the difference between actual earnings and consensus estimates. I grade over 5,000 stocks on this key metric, and only stocks with the highest grades are worthy of my recommendation. If a stock beats Wall Street’s earnings forecast by a significant amount, share prices can rally dramatically. This is why I closely monitor the market to find stocks that regularly post earnings surprises. When I find an unsung stock that has regularly performed better than the “experts” have predicted, I recommend it on the premise that it should top expectations again—and see shares surge when it does. Click here to see my top three stocks by earnings surprises.