I haven’t been this excited about a “guru” trade in a while…

Last week, my system identified an opportunity I’ve only seen a handful of times since I designed it. Specifically, it found a stock with a perfect 10 “guru score.”

Achieving a perfect score under my system isn’t easy. In fact, I can probably count the number of times I’ve actually seen it done. Micron Technology (Nasdaq: MU), a current “Guru Trader Portfolio” holding, is an example of a stock that had a perfect rating when we added it, and it’s up 45% in the past four months.

Let me explain why it’s so difficult to have a perfect 10 rating…

#-ad_banner-#My system relies on two specific indicators to identify a potential stock pick: relative strength and cash flow growth.

Relative strength shows how a stock is performing “relative” to the market. The higher the relative strength, the more a company’s stock price is rising in relation to its peers.

This indicator is important because it identifies stocks that are outperforming today. After all, if you want to make money the fastest way possible, you want to buy stocks that are already on their way up. It’s like the difference between waiting at a bus stop and hopping on a moving train.

The second variable in my equation involves cash flow — the amount of money coming into a business. I use cash flow as an indicator because it is the lifeblood of any corporation. It is used to buy factories, develop new products and return wealth to shareholders through dividends and stock buybacks. History has shown that companies with high cash flow growth outperform those without.

To find those companies growing cash the fastest, my system relies on an indicator called cash flow relative strength. Like the relative strength indicator mentioned in the preceding paragraphs, cash flow RS measures how a company is performing relative its peers. However, unlike the traditional RS rating, this indicator measures how fast a company’s cash flow is growing, rather than how fast its stock price is rising.

From a numerical perspective, both indicators are used identically. The higher the rating, the better the company is performing in its respective category. For example, if a stock has a cash flow RS of 9 and a traditional RS of 8, it means it’s growing cash flow faster than 90% of the market while its stock price is rising 80% faster.

That means to get a perfect 10, a stock needs to be outperforming close to 100% of the market in both categories. In order to do that, it must be growing both its cash flow and its stock price faster than almost every other stock on the market.

Think about that for a second. My system screens for over 8,000 stocks. So for a company to receive a 10 from both indicators, it means it is doing better than at least 7,920 of them!

Of course, having both a perfect cash flow RS rating and a perfect traditional RS rating isn’t enough for me to label a stock a buy. Before I can even consider recommending a stock in Guru Trader, it must first be held by a world-class “guru” investor. These are people like Warren Buffett, Carl Icahn, and Seth Klarman to name a few.

The fact that I only recommend stocks held in these gurus’ portfolios is yet another reason I’m excited about this week’s stock pick. That’s because this company isn’t owned by just one of the top 20 gurus I follow — it’s owned by two. Specifically, both Seth Klarman and Jim Simons announced positions in this company as of their latest 13F filings.

Both of those investors have profited handsomely from this week’s stock pick. According to their SEC filings, both Klarman and Simons have enjoyed total returns in excess of 138% from this stock since they added it to their portfolios a few years ago.

But I think those gains are just the beginning. Given this stock’s industry leading technology, its strong guru ownership and its perfect 10 “guru score,” I expect this stock will continue to outperform in the months to follow.

Out of fairness to my subscribers, I can’t reveal this week’s Guru Trader pick in today’s essay. But it’s not too late to get my “perfect 10” recommendation sent to you today.

For more information about my system, and to learn how to get my analysis sent to you right now, simply follow this link.