This Secret Signal Points To Huge Market Gains
As key indices continually reach new all-time highs, some analysts predict that we are in an unstoppable bull market.
#-ad_banner-#But others argue that valuations are being manipulated by easy money policies and share buyback programs, which will result in an imminent market crash.
As an average investor, it is hard to forecast where the market is going and, thus, where to invest.
My answer: ignore the talking heads and follow my secret signal to solid investments and outsized gains.
This signal is based on one simple truism: humans are wired to act in their own self interest.
No one invests their own hard-earned money — or even the money they’ve earned easily — in the hope of anything other than the best possible return.
Where your heart lies, there your treasure will be also. That bit of investing wisdom, paraphrased from the Book of Matthew, was true when it was written and is still true today.
Consider the CEO of Company X. His stock price is in the proverbial toilet. He can’t get a break on Wall Street, and the problems on Main Street aren’t looking like they’re going to do much for his bottom line, either.
No one is too surprised if he sells. But what if he starts buying? That’s a whole other ball game.
The executive management and board members know what’s really going on and how the company can react to it. That’s the point of monitoring insider transactions.
Almost three years ago, I put this strategy to the test. Using StreetAuthority’s Bloomberg research terminal, I performed a special search to display all insider trades for the past six months with a market value of more than $1 million.
Because stock is often part of an executive’s total compensation package, I excluded stock options that were exercised by management. This resulted in a list of companies with a large number of insiders and shareholders who went to the bank, moved at least a million clams into their brokerage account and bought shares in their own companies with their own money.
But that list of companies was unmanageably huge. So, I reconfigured my approach to break down the market by sector. There are ten sectors in this screen function: Energy, Materials, Industrials, Consumer-Cyclical, Consumer-Noncyclical, Healthcare, Financials, IT, Telecom and Utilities. Once again, I kept my eyes peeled for the really big trades, which I defined as more than $1 million.
This did indeed turn out to be a better approach.
The search revealed that one company, SunPower Corp. (Nasdaq: SPWR), had seen $163.7 million worth of insider trades in the six months preceding my search, easily topping the list.
At the time, the solar energy business was considered a laughing stock by many. But I wasn’t paying attention to that. I was intrigued by the $163.7 million worth of confidence exuding from company employees.
SunPower manufactures panels for all sorts of electrical applications up to and including solar “farms,” which were a vision of the company’s founder, Dr. Swanson. The $1 billion company was obviously leading in innovation. In 2011, it had delivered more than $2.2 billion worth of photovoltaic, or PV, panels, which are commonly referred to as solar panels.
The company also had great technology: It had just announced that its third-generation SunPower Maxeon solar cell set the world record for converting sunlight to power with an electricity conversion efficiency of 24%.
With great technology, an international reach and expertise in all sizes of PV projects, SunPower looked stronger than all of its competitors. Plus its finances were strong: $650 million in cash, $800 million in receivables and more than $400 million in inventory.
I may not have stumbled upon any of this information if I hadn’t been keeping tabs on how much employees inside the company were betting on themselves.
When I first mentioned SunPower to subscribers of my premium newsletter, Game-Changing Stocks, SunPower traded at $6.25 per share. Today, each of those shares are worth $32.43. This represented a 419% gain, more than nine times larger than the S&P 500’s increase of 46% during that time.
Gains of this magnitude might jump off the paper at you, but it’s nothing new for my Game-Changing Stocks readers. Triple-digit gains are never a dime a dozen, but finding the best opportunities in the market is what my newsletter hangs its hat on.
Recognizing these clues, like executives betting personal money on the companies they manage, are the types of strategies that have turned my subscribers on to triple-digit gains.
That’s where Game-Changing Stocks comes in. I spend time digging through reports and statements, looking for the next big thing, so I can tell my subscribers where to invest their money before the gains are gone.
Another method for finding triple-digit winners is to look for firms that profit from major moves by big-name companies. In fact, I’ve prepared a brand-new research video that contains urgent information about the key suppliers behind Apple Pay.
I have been pounding the table for months about these companies, touting their ability to deliver triple-digit gains in a short amount of time. We’ve already seen impressive returns from many of these stocks. The good news is that there’s still monumental potential for these firms. Please take a second to check it out, by clicking this link.