Use Earnings Volatility To Buy 100% Winners Monday, November 25, 2013
Editor's Note: This Wednesday, I'm releasing a brand new report that details a fast-moving stock we're adding to our portfolio. Past recommendations like this have rocketed up 59%, 134%, and 151% in a matter of months. And we believe this stock could DOUBLE sometime in early 2014. Watch your inbox, as a valued Income & Prosperity reader, you'll get advance notice about this stock including all the details of our 80% OFF Black Friday Sale!
Earnings season can be particularly stressful for investors since the announcement event is often a catalyst for share price movement. And lets face it, these movements aren't always to the upside.
For small caps and growth stocks in particular, earnings announcements often send shares jumping around like beach balls. This latest earnings season was no different - over the last month several companies that I follow (and recommend as "buys") fell more than 8% the day after releasing third-quarter earnings.
It can be difficult to be calm amidst earnings season craziness, especially when your stock tanks. But if you're in the right stocks to begin with, this volatility often amounts to a quick blip on the screen that represents an opportunity to purchase more shares at a short-term discount.
As I stated earlier, I find this volatility tends to be more severe with small caps and growth stocks. And time and time again these good stocks recover quickly and go on to generate huge returns for patient investors.
This is one of the reasons I always recommend that investors dollar cost average into an investment. This is especially important with volatile small caps since a 10% move, or greater, is often the result of just a few large investors moving money around.
Averaging into the position significantly decreases your risk of buying at the "wrong" time. Incidently, I also find the strategy helps investors take that initial plunge to buy a potential big winner, because buying half a position first feels a lot safer than an "all in all at once" investment.
Here's an example of this strategy in practice. The stock is Datawatch (NASDAQ:DWCH), a microcap stock that is a play on Big Data. I first recommended the stock to 100% Letter subscribers in November 2012 at $17.75 when the stock was on a downtrend.
Own this Stock Before Dec. 31st -- The Day Mobile Takes Over
Soon, the majority of Internet traffic will originate from mobile devices including smartphones and tablets. And even though Apple is selling over 200 million iPhones this year alone... Here at Wyatt Research, we're NOT adding shares of Apple today. We're recommending the one company no one is taking about... the one reaping massive profits each time a new Apple or Samsung smartphone is activated. In fact, its stock is set to soar 117%! And its shares are already on the move -- it's up 20% in the last month alone! So, before this stock moves any higher, read our latest report for all the details: Click here for the full story.
Unfortunately, that downtrend continued through the third-quarter 2012 earnings season, and even into the beginning of 2013. However, confident in my research, I sounded the rally cry for DWCH again in early March, 2013 and urged 100% Letter subscribers to add to their position.
Thus far, it has been the right call - based on the average cost of two such timed purchases subscribers are up over 100%.
Three common-sense guidelines helped us stick with DWCH. And these same simple tips can help you turn earnings season volatility into 100% winner opportunities, too:
Lesson #1: Do your homework, then keep doing it because businesses often evolve quickly over time ... or not. The only way you'll know the difference, and be prepared to act, is if you stay on top of things.
Lesson #2: Small-cap stocks often trade in an inefficient market, where there is an imbalance between buyers and sellers. This alone is not cause for concern but rather an opportunity for astute investors. And it's one of the reasons many chose to focus only on small-cap and microcap stocks where independent research is the only reliable way to gain a knowledge advantage over other investors.
Lesson #3: Volume matters. Understanding that volume and liquidity both affect stock price movements can help you get a good price. And it also helps you understand why a 10% move can mean absolutely nothing in the big picture with a quality small-cap stock. Remember to use limit orders, not market orders, to get the price you want.
Market volatility can be intense at any time of year, and especially so during earnings season. Maintaining discipline is the key.
These three common-sense tips can help you understand if your small-cap stocks are actually crashing or if they're just bouncing around. I use them to help me emerge from earnings season with a stronger portfolio, and I think you can too.
Tyler Laundon, MBA
Newport, Rhode Island
Triple your dividends with one stock -- starting Nov. 27
With so many investors grabbing up shares of blue chips, yield is getting hard to come by. In fact, the average yield of the Dow has sunk to 2.1%. But our group of investors isn't worried. We're collecting big monthly dividends... up to $550 every 30 days... from a little-known investment that yields a whopping 12%! If you'd like to tap into this income stream, and earn up to triple the dividends of even the best blue chip, click here for our full report on this opportunity.
Popular Analysis from Wyatt Research
Friday, November 22, 2013 Robert Shiller Says, Invest Cautiously Nothing can stop this bull market. The Dow Jones has surged 900 points since early October and reached new highs Thursday, while the Standard & Poor's 500 index pierced 1,800 for the first time ever.
Thursday, November 21, 2013 BBY: A Great Buy On Weakness Shares of Best Buy (NYSE:BBY) are still a great buy, especially after getting slammed on Monday. After reporting Q3 results, the stock fell 11% to $38.80.
Wednesday, November 20, 2013 The Latest Sign of a Second Internet Stock Bubble Silicon Valley is littered with stories of genius college students dropping out to do the tech startup thing. The ones that go bust are rarely heard of. But success stories like Mark Zuckerberg and Facebook (NASDAQ: FB) capture the imagination of capitalists seeking to invest in the next great thing.
Latest Income & Prosperity
Friday, November 22, 2013 Icahn Enterprises: An Income Investor's Best Friend When the opportunity arose to add Icahn Enterprises LP (NYSE: IEP) to the High Yield Wealth portfolio in July, I pounced like Michael Moore on an unattended Burger King Triple Whopper with cheese (1,300 calories, by the way).
Thursday, November 21, 2013 Supremex: The Rare 33% Dividend Grower When a stock increases its dividend, it's only a matter of time before the share price jumps. One overlooked Canadian dividend stock is raising its dividend by 33%. Thanks to the small size of this stock, most investors didn't even notice.
Wednesday, November 20, 2013 BDCs: The Perfect Income Investment The more I vet income investments, the more convinced I am that business development companies (BDCs) are the investment of choice for many income investors.
Disclaimer & Important Information
WyattResearch.com is owned and published by Wyatt Investment Research. Wyatt Investment Research is neither a registered investment adviser nor a broker/dealer. Readers are advised that this electronic publication is issued solely for information purposes and should not to be construed as an offer to sell or the solicitation of an offer to buy any security.
We encourage you to review our full Email and Disclosure policies. To view our Email Policy, please click here. To view our Disclosure Policy, please click here.
If you believe this communication to be a mistake or unsolicited, please e-mail firstname.lastname@example.org with details regarding your situation, and we will be sure to promptly investigate your situation.