The latest 'hot' IPO is soaring...

The latest 'hot' IPO is soaring... The decline in these commodities could be ending... 'El Niño' is back... A great speculation is setting up...

It appears investors can't get enough of the latest trendy stock to go public...

Fitbit (FIT) – which makes the popular wearable fitness trackers – went public last week. Shares were originally priced at $14 to $16 earlier this month, but demand caused the company to raise the price to $17 to $19 days later. It finally went public on Wednesday at $20 a share... already 43% more expensive than the low end of its estimated range.

When Fitbit opened for trading last Thursday, shares debuted at $30.40, another 52% higher than its final IPO price. Investors have continued to push shares higher, hitting as high as $40.38 a share yesterday before closing at $37.88. Shares closed today around $36.

Fitbit does have some notable characteristics...

For one, its brand name has become so closely associated with fitness trackers, people have started to use it even when describing other brands – not unlike tissue brand Kleenex and photocopier brand Xerox.

It's also participating in a larger trend we've been following – the "Internet of Things." Editor in Chief Brian Hunt explained this technological megatrend in the April 23 Digest...

Right now, you could search for good, local restaurants by speaking into your phone. You might program your home's security system with your iPad. You might adjust your home's thermostat from controls in your car. Your wristband might be transmitting your heart rate to an "app" on your phone.

These are all examples of what people are calling the "Internet of Things." Everyday devices are being plugged into the Internet. It works hand in glove with the explosion of smartphones and portable tablet computers. Everything is getting connected. It is the biggest, most important technological trend of our time.

But there are also plenty of reasons to doubt Fitbit as an investment...

For one, the company held a 34% market share in the first quarter of 2015, according to market intelligence firm IDC. While that's a significantly larger piece of the "pie" than competitors Garmin (6%), Samsung (5%), and Jawbone (4%) held, it's down significantly from the company's 45% market share in the same quarter of 2014.

Even more concerning is research from Endeavour Partners. The digital-strategy consulting firm polled 6,223 U.S. adults and found that while one in 10 already own a fitness tracker, more than 50% of those who own them no longer use them at all. Worse, one-third of those stopped using their device within the first six months.

In addition, competitor Jawbone has two outstanding lawsuits filed against Fitbit. One suit accuses Fitbit of "'systematically plundering' confidential information by hiring Jawbone employees who improperly downloaded sensitive materials shortly before leaving," according to the Wall Street Journal. Another suit alleges potential patent infringement.

Finally, companies like Apple are now including similar technology in their smartphones and wearable devices. This could dramatically reduce the appeal of standalone fitness trackers like those Fitbit makes. Why shell out another $100 or more to wear a band on your wrist, when your iPhone or Apple Watch can already do the same thing (plus much, much more)?

We checked in with our resident tech expert and Stansberry Venture editor Dave Lashmet for his thoughts. As he explained to us in a private e-mail...

Avoid tech IPOs with lots of competition, especially dominant competitors like Apple and Google.

With this huge caution in mind, Fitbit might have a niche in low-priced network fitness bands for health and fitness programs in corporate America. Still, I suspect Fitbit is the Blackberry of wristbands. It looks like it has a walled garden... and it will lose its wall...

Regular Digest readers know we're skeptical when the market falls in love with the newest technology or fad. We've been outspoken critics of online marketplace Etsy and mobile-camera maker GoPro for similar reasons. We wouldn't be shocked if Fitbit is out of style – and its products collecting dust in dresser drawers – a year from now.

Changing gears... If you've been paying attention to any financial media outlets, you're well-aware that commodities have gotten crushed.

As we've discussed several times, prices across the resource sector have suffered brutal declines over the past few years. The recent surge in the U.S. dollar has only made things worse.

While this has been difficult for resource investors, it has been relatively good news for food prices. Agriculture commodities like sugar, corn, wheat, and soybeans – which are used in nearly every packaged food product in the U.S., and as feed for livestock – have plummeted, too. All are trading at multi-year lows today.

We've covered the bullish case for resources in general. But if the latest data is correct, agricultural commodities in particular could be headed much higher...

For the first time in five years, an "El Niño" weather event officially developed earlier this year.

El Niño occurs when the Pacific Ocean near the equator becomes unusually warm. The higher temperatures can cause severe effects on weather patterns around the world –ranging from droughts to too much rain – which in turn can wreak havoc on crops.

The last time an El Niño occurred in 2009, droughts wiped out crops in Southeast Asia and Australia and sent many agricultural commodity prices much higher. Prices of sugar and palm oil – which are particularly important in those areas – were hit especially hard. Palm oil jumped 70%, while sugar more than doubled to hit a 30-year high.

Now, according to a new report, this year's El Niño is strengthening and could become more powerful than expected. From an article in Bloomberg...

The El Niño developing across the Pacific strengthened further, according to Australia's Bureau of Meteorology, which again highlighted patterns shown by the data that are similar to the record 1997-1998 event.

El Niños have the potential to affect weather and harvests around the globe by baking parts of Asia, dumping rain across South America and bringing cooler summers to North America. The event poses a risk for the global economy in the second half as it can hurt crops and boost inflation, according to Citigroup Inc. The 1997-98 El Niño was the strongest on record, according to the National Oceanic and Atmospheric Administration.

The report did note that it's still a bit early to know for certain how intense the event will be... and the strength of an El Niño doesn't always correspond to its impact. For example, the 2009 event wasn't nearly as strong as the 1997 event, but its effects were more severe. Still, officials are warning the effects on crops could be significant later this year.

Our colleague Matt Badiali, editor of the Stansberry Resource Report, noticed this potential earlier this year, and predicted that it could set up a great speculation in sugar. As he told readers in Growth Stock Wire...

According to Georgia Twomey, a sugar analyst for the giant Dutch bank Rabobank, "below-average rainfall forecasts and the potential of an El Niño event raises concerns for the 2015 sugar crop."

In Australia (the world's ninth-largest sugar producer, which accounts for 7% of the world's sugar exports) and India (the world's second-largest sugar producer, which accounts for 3% of the world's sugar exports), El Niño causes severe drought – which limits sugar cane growth.

In Brazil (the world's largest sugar producer, which accounts for 45% of the world's sugar exports), it has the opposite effect. An El Niño event causes torrential rains, which are just as bad as drought. High-water levels increase disease and pests. It also makes harvesting sugar cane more difficult.

According to commodity broker Marex Spectron, the El Niño in 1997 caused sugar production in Brazil to decline by 2%. That was the only year in the last decade when production fell.

In addition to the potential for damaged crops, Matt noted demand for sugar is increasing, particularly in China and India, who already import huge amounts.

Stansberry Resource Report analyst Brian Weepie updated readers on the situation last month...

Australia, Japan, and the U.S. have all said that an El Niño event emerged in February. And the U.S. Climate Prediction Center says there's a "70% chance the pattern will continue through the Northern Hemisphere this summer." Australia's weather bureau has even said this year's event will probably be "substantial."

So we could soon see sugar production decrease significantly.

Meanwhile, as Matt showed you in January, sugar demand is increasing in places like China and India.

But despite confirmation of an El Niño event, sugar prices haven't rallied. In fact, they fell to a new low this month. So we asked the Stansberry Resource Report team for an update today.

In a private note, they told us the continued drop in prices was likely due to two factors...

First, Brazil's current sugar harvest – which hasn't yet been affected by the event – has been better than expected. As the world's No. 1 producer, this unexpected additional supply is weighing on prices. But the Brazilian harvest will be ending soon, and this often results in a seasonal low in prices.

Second, there was an El Niño "false alarm" last year. Forecasters warned of an event in 2014 that never actually occurred... so traders who were "burned" last year are likely hesitant to do the same this year.

Matt says the reasons to expect a rally haven't changed. If anything, today's news suggests the opportunity is even better. A stronger El Niño makes the bullish case more likely.

Matt recommends three exchanged-traded funds – the iPath Bloomberg Sugar Subindex Total Return Fund (SGG), the iPath Pure Beta Sugar Fund (SGAR), and the Teucrium Sugar Fund (CANE) – as an easy way to speculate on higher sugar prices from here.

New 52-week highs (as of 6/23/15): American Financial Group (AFG), CVS Health (CVS), iShares U.S. Insurance Fund (IAK), iShares Core S&P Small-Cap Fund (IJR), Prestige Brands Holdings (PBH), and ProShares Ultra Health Care Fund (RXL).

In the mailbag, Stansberry's Investment Advisory analyst Mike DiBiase answers a reader's question about calculating capital efficiency. Send your questions to feedback@stansberryresearch.com.

"Hi, I read 'Four Steps for Finding Great Investments' in today's DailyWealth. I tried to replicate a couple of the lines in the table following and was reasonably close on three of the four benchmark calculations. However, I could not come very close to the efficiency values calculated. I tried the following formulae (using data and descriptions from Yahoo Finance):

Dividends Paid / Capital Expenditures

Dividends Paid / (Capital Expenditures + Sale Purchase of Stock)

(Dividends Paid + Sale Purchase of Stock) / Capital Expenditures

"Could you please give me some insight about where I am going wrong? Thanks very much!" – Paid-up subscriber Jim Hawley

Mike DiBiase comment: Hi Jim, the correct formula is one of the ones you pointed out: (Dividends Paid + Sale/Purchase of Stock) / Capital Expenditures

All of these numbers can be found in the Cash Flow statement section in Yahoo Finance. Capital expenditures is a single line under "Investing Activities" in the Cash Flow statement, and Dividends Paid and Sale/Purchase of Stock are separate lines under "Financing Activities" in that statement.

However, it's important to note that the numbers we presented in the table were the average over the last three years. So you have to take the average of each of the numbers over the last three years before calculating the ratio. Fortunately, Yahoo Finance presents the last three years for you in all of its financial statements.

Regards,

Justin Brill
Baltimore, Maryland
June 24, 2015