Cherry-Picking Wall Street Winners
Sometimes the gap is so wide you can drive a truck through it.
The gap — between the stock price and the worth of the business — can disappear faster than a gazelle with a lion on its trail, so you need to act quickly.
Every time I’ve seen a gap like that, I didn’t spend too much time thinking. Instead, I checked my numbers over twice, made sure I didn’t miss anything, and then bought with both hands.
That’s the way Wall Street insiders have been making money for decades.
Most of the time, investors miss the boat completely.
They think it’s “too good to be true” and assume there must be some mistake.
Thank God for those investors, because without them, we wouldn’t be able to have the opportunity to make the kind of money we do.
I could talk until I’m blue in the face, and they still won’t get it, and think of every excuse in the book to not buy.
In fact, I remember knowing one trader on the trading floor that used to wait until the stock price moved higher, then would say, “You see, the market didn’t give me a chance to buy.”
The funny thing about him — he actually believed his own cock-and-bull story.
Sometimes, Mr. Market throws you a bone... and when he does, you need to act on it.
The kind of “bone” I’m talking about is a stock with a brand name, a market cap of more than $10 billion, and that has been around for decades.
Those are the opportunities I stay up at night dreaming about.
A little more than two months ago, I sent you a list of stocks that I said were trading for pennies on the dollar.
It was like shooting fish in a barrel.
Seriously, all I did was identify which stocks had wide gaps between the stock price and the worth of the business.
The only thing I hadn't counted on was how fast the market would close that gap.
After successfully picking stocks for over 30 years, I’ve seen those gaps get filled in as little as a few days or as long as a few years.
Point is, we can easily know the what, just not the when.
Yes, It's This Easy...
Western Digital (NASDAQ: WDC), the maker of data storage solutions, is the bone the market threw us a few weeks back... and we've been riding it higher ever since.
The business is not a hard one to figure out: it develops and manufactures hard and solid-state drives for original equipment manufacturers, as well as consumers.
The company's net income is made up of enterprise storage (cloud computing), consumer electronics, and PC and laptop storage.
And over the past few years, the storage industry has been shrinking as big storage companies gobbled up smaller storage companies — turns out Western Digital was one of the gobblers and now is a global leader in the hard disk drive market!
Although the company was quickly becoming one of the biggest fish in a small pond, Mr. Market wasn’t too interested in Western Digital.
Even though it had a rock-solid balance sheet (with $5.2 billion in cash), ever-growing market share, and throwing off $1.5 billion in free cash flow... the market STILL ignored it.
Nobody was paying attention to the company’s recent acquisition of SanDisk, a move that was going to make a meaningful impact on its bottom line.
Western Digital was priced like a company about to fall into the abyss — the stock was trading for only 10x trailing earnings!
Let me put it this way... the market was only willing to pay $10 for every $1 of earnings, or $36.77 a share.
So even if Western Digital just continued to plod along (according to my personal analysis), it should’ve been trading for at least 15x trailing earnings — not 10x.
In other words, the gap between the stock price and the worth of the business was so big, an 18-wheel freight truck could’ve driven through it and still had room to spare!
And just as we knew, it wasn't long before Western Digital updated its financial guidance for the next quarter to reflect the contribution of SanDisk.
Since then, the stock has soared... pushing our shares to new heights.
Last week, WDC reported impressive fourth-quarter results. However, Mr. Market didn’t like WDC’s forward guidance, and the stock price sold off. If you missed out on buying WDC when I first told you about it, Mr. Market is giving you a very attractive entry point.
The stock closed yesterday at $46.07, giving us a gain of 25% in about two months.
Yes, it's THAT easy.
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If you took advantage and bought the stock — congratulations.
Truth is, a few of your stories have trickled my way after dozens of readers wrote in to tell me how easy it really was for them.
And I love hearing them, too. In fact, I want to hear yours. You can reach me with your own successful trading stories by writing to email@example.com.
But it's not enough... I want you to take the next step to secure yours and your family's financial future.
In my advisory service, the Inevitable Wealth Portfolio, Western Digital is just one of 30 stocks that we hold.
And every one of the stocks we hold was added when there was a wide gap between the stock price and the worth of the business.
More importantly, I’d like to invite you to experience the same success that members of my Inevitable Wealth Portfolio have had since I created it years ago.
I know this sounds a little too good to be true, but I prefer to let my record stand for itself.
Since 2009, members of my Inevitable Wealth Portfolio have turned a profit on three out of every four trades we've made!
Unfortunately, there's one small catch...
Since my time and resources are limited, I don’t want thousands of investors signing up that would waste my time, never act on my recommendations, and flood my email inbox telling me when they couldn't or wouldn't make a winning trade with us.
Just like my trading floor buddy that couldn't wait for the stock price to rise so he wouldn't have to pull the trigger.
That said... if you ARE ready to set yourself apart from the rest of the lemmings on Wall Street, and start to make serious money the way the Wall Street insiders do — I want welcome you to our family.
All my best,
Charles cut his chops on the trading floor of the New York Futures Exchange before moving on to become a wildly successful money manager on Wall Street.
And with more than 35 years of recommending stocks under his belt, Charles has knocked the cover off the ball, compiling an amazing record of success and posting gain after gain for his loyal readers. He is the editor of Park Avenue Investment Club and the Insider Alert newsletters.
Charles is also the author of the highly acclaimed book, Getting Started in Value Investing.
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