Nothing makes me happier than delivering gains to my Safe Money Report subscribers. So I was thrilled to be able to send them a Flash Alert on Tuesday bagging two more rounds of profits.
By my reckoning, they had the chance to sell shares of one diversified industrial firm for a handsome 26.5 percent more than they paid just six months earlier. They also had the chance to sell shares of a hospital operator for about 16.5 percent more than they paid back in November.
It’s not like these are the only profits we’ve taken off the table in Safe Money recently either. We’ve had several other big winners, month in and month out, for the past several quarters.
Naturally not all positions work out. Losses can and do happen, and these are only our best estimates of subscriber trading results. But as I mentioned, I’m very happy with how things are going.
So what’s the secret? What is working in this market … and what should continue to work?
First, you have to zero in on the sectors that are working for various fundamental, longer-term reasons.
Think about the boom in domestic energy production and transportation. Or the long-term “up” cycle for aerospace driven by the need to upgrade and expand fleets with more fuel-efficient planes. Or the aging of the American population, as well as populations in other advanced nations. These aren’t short-term events. They are long-term, secular trends that are spinning off immense profit opportunities.
|Opportunities can be found in aerospace, driven by the need to upgrade and expand fleets with more fuel-efficient planes.|
Second, you really should be using the power of the Weiss Ratings to help screen for winners and sinners within those sectors — and your portfolio. The ratings model takes into account both performance and risk inputs, and ranks stocks on a simple “A” to “E” scale.
I’ve had a lot of success by simply focusing on stocks that get the best ratings — those rated at least a “B-” (equivalent to “Buy”). The industrial firm I mentioned merits a Weiss Rating of “B+,” for instance, while the hospital operator got an “A-.”
Third, adjust your strategies to account for all the merger-and-acquisition activity in the markets, as well as the wave of increased investor activism that’s leading to dividend hikes, stock buybacks and other shareholder friendly actions.
When one company in a sector makes a big move on the M&A, dividend, or buyback front, you typically see others follow. That’s because investors start pressing other company managements to act.
Shares of the industrial firm I mentioned recently surged in part because an activist investment fund took a stake of almost 6 percent in the stock, and started agitating for change. So in response, I’ve focused on stocks in sectors with a lot of recent deals or announcements. Two examples would be food and beverage, and pharmaceuticals.
Fourth, you want to make sure you keep an eye on overall risk in your portfolio, and take advantage of shorter-term dislocations. I’ve done my best to “trade around” positions. That means adding exposure to promising, long-term winners when they sell off … and grabbing profits when they run up and market complacency rises.
If you take these steps, I think you’ll be in the best position to profit from the current market environment. Or to make your life easier, you could just subscribe to Safe Money! All you have to do is go to this website, or give us a call at 800-291-8545. Then you can get the names and ticker symbols of the companies I mentioned earlier, and all my future recommendations.
Until next time,