By Matt McCallApr 05, 2020
We all dream of amazing profits from the next Google (GOOGL) or Amazon (AMZN). Well, this is the time to find them – among great small caps that have been unfairly hit in this coronavirus crisis.
Not just any small caps, of course. The innovators. The job creators. The ones who show the early signs of going on to do great things.
I’m talking about boldly buying something like Netflix (NFLX) in 2008. Back then, Netflix was mostly a mail-order DVD rental company. It was a small cap worth $1.3 billion. And we were in the thick of the financial crisis.
Ten years later, you’d have been up 11,000%… even 12,000%.
Sadly, many, many people missed out on that buying opportunity in 2008. I get it – bear markets are scary. But I’d hate to see anyone make that mistake today.
So, if you haven’t already, go here to learn the #1 stock in my new Crisis & Opportunity Portfolio – absolutely free. Then, if you decide to give Early Stage Investor a try afterward, you’ll have access to all my picks, including the first three stocks in the new Crisis & Opportunity Portfolio.
A lot of folks will tell you that small caps are “too risky,” especially now. Well, that’s partly true… At the small-cap end of the market, investing can involve greater risks. But with those risks come the potential of even greater rewards if you know what to look for.
That’s because many of these smaller companies are newer up-and-comers… maybe even operating in an all-new industry. Some of them are great businesses, run by smart, hardworking people. Some are not. Obviously, you want to invest with the first group.
That’s why I believe in applying an analytical model to any small-cap stock I’m considering.
One of the factors I look at is the company’s path to profitability.
Now, don’t get me wrong. I don’t necessarily need to see huge profit margins right now.
Just look at Amazon and Netflix. In the early years, they were losing money. That’s because they continually invested in growing their businesses… which allowed them to increase their market share and hammer their competitors. So, investors bought them hand over fist… because they expected massive profits in the future. And AMZN and NFLX delivered them profits in the thousands of percent.
The key is a clear path to future profitability. There must be a sustainable business model that can generate cash in the future. If not, then pass on it.
To find such a healthy, growing business, one of the hallmarks is rising revenue. Rising revenue allows a company to continually invest in its business. It’s a great story to attract the best talent in an industry. It also attracts the best partners.
I recommend looking for at least 10% annual revenue growth. In fact, I’d prefer to see 20% or 30% annual revenue growth.
Here’s where I’m finding some of them…
This is pretty much what it sounds like – using numerical models or even machine learning to predict future outcomes.
My #1 stock in the Crisis & Opportunity Portfolio is using predictive analytics for telehealth: the virtual doctor’s visits that are keeping us all out of waiting rooms during the coronavirus… and, most likely, many other times in the future.
This stock lost a lot of ground since February – yet the company is forecast to deliver 61% annual revenue growth, and it has a path to profitability. That’s a great buy right now.
In the near future, a lot more things in your home or office will be connected to the internet, often with voice recognition so you can use them hands-free. That’s the technology that one of my other Crisis & Opportunity Portfolio stocks makes possible.
This is also a great time to snap up this stock – especially since it’s already profitable, and it’s projected to see 67% annual earnings growth from here. Click here to learn more about it. There’ll be more where this came from.
It’s not just “things” that’ll get smarter. Cars will, too. Right now, autonomous vehicles – and autonomous aerial vehicles in particular – are a tiny niche. By 2040, it’ll be a $1.5 TRILLION industry, according to Morgan Stanley!
But again, and most importantly, the company I’ve chosen is making money! Revenue is expected to increase by over 67% annually in the next few years. Go here if you want the full details on my Crisis & Opportunity approach.
History is clear: Every time a major sell-off happens, it creates great long-term buying opportunities. Smaller, largely unknown companies often get hit harder, even if they are operating in major hypergrowth trends. That makes them some of the best opportunities out there right now.
P.S. I’m talking about stocks like the one I just shared that’s in my new Crisis & Opportunity Portfolio.
It’s a small, innovative company that uses artificial intelligence and big data to provide predicative analytics in health care.
This could go up 1,000% or more over the next few years.
I can pretty much guarantee you’ve never heard the name of this company. You can find out all about it here.
Click here to listen to Matt McCall’s MoneyLine podcast! This week, smart investors are wondering if the stock market has hit its bottom. Is it time to buy the dip? No one can know for sure when we will see the ultimate lows, but Matt has a few ideas about what stocks could see massive growth in the future.
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