The stocks I want to buy after a correction...
Right now, you're probably enjoying big gains on several positions in your portfolio. I (Brian Hunt) think selling covered calls on some of those stocks makes sense. If you own some cheap blue-chip stocks, like Intel or Microsoft, you can use that as a strategy to earn 12%-15% yields on very safe stocks.
This is a strategy we regularly use in DailyWealth Trader. For example, in the January 2 issue, Amber Lee Mason recommended selling covered calls on Cisco...
|
Selling covered calls is a good idea as long as you own safe, blue-chip companies bought at a reasonable price.
As I've said previously, we could see a 5%-10% market correction in the near future. If that happens, the calls you sold will likely expire worthless... And you'll maintain your original equity position.
If we get that correction, I'm going to be looking to sell puts on blue chips. It's smart to have a game plan leading up to that correction so you know exactly what you want to buy... and at what price.
My "shopping list" today is similar to the shopping lists of a lot of value investors. I would be looking to see if Coke and McDonald's are oversold... I'd also be looking at Microsoft, Internet "plumber" Cisco, booze giant Anheuser-Busch InBev, and cigarette maker Philip Morris. In general, I'm looking for businesses that have great brands – the types of companies investing legend Warren Buffett likes to buy.
I generally watch the same group of stocks when there's a substantial market selloff. And the companies that have decades of uninterrupted dividend growth tend to draw in folks looking for income. The large dividends give these stocks a natural buoyancy, which helps them rally after a 5%-15% correction. Those companies are excellent vehicles for executing a put- and call-selling program.
– Brian Hunt
The stocks I want to buy after a correction...
In today's Digest Premium, S&A Editor in Chief Brian Hunt discusses a strategy to help lock in your gains today... and lists a number of stocks he'd like to buy if we see a short-term market correction...
To continue reading, scroll down or click here.
Stansberry & Associates Top 10 Open Recommendations
(Top 10 highest-returning open positions across all S&A portfolios)
As of 01/14/2014
| Stock | Symbol | Buy Date | Return | Publication | Editor |
| Rite Aid 8.5% | 767754BU7 | 02/06/09 | 674.3% | True Income | Williams |
| Prestige Brands | PBH | 05/13/09 | 438.7% | Extreme Value | Ferris |
| Constellation Brands | STZ | 06/02/11 | 281.0% | Extreme Value | Ferris |
| Enterprise | EPD | 10/15/08 | 249.5% | The 12% Letter | Dyson |
| Ultra Health Care | RXL | 03/17/11 | 225.3% | True Wealth | Sjuggerud |
| Fluidigm | FLDM | 08/04/11 | 197.5% | Phase 1 | Curzio |
| Ultra Nasdaq Biotech | BIB | 12/05/12 | 195.5% | True Wealth Sys | Sjuggerud |
| GenMark Diagnostics | GNMK | 08/04/11 | 191.5% | Phase 1 | Curzio |
| Ultra Health Care | RXL | 01/04/12 | 184.1% | True Wealth Sys | Sjuggerud |
| Altria | MO | 11/19/08 | 181.2% | The 12% Letter | Dyson |
Please note: Securities appearing in the Top 10 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the model portfolio of any S&A publication. The buy date reflects when the editor recommended the investment in the listed publication, and the return shows its performance since that date. To learn if a security is still a recommended buy today, you must be a subscriber to that publication and refer to the most recent portfolio.
| Top 10 Totals |
| 1 | True Income | Williams |
| 2 | Extreme Value | Ferris |
| 2 | The 12% Letter | Dyson |
| 1 | True Wealth | Sjuggerud |
| 2 | Phase 1 | Curzio |
| 2 | True Wealth Sys | Sjuggerud |
Stansberry & Associates Hall of Fame
(Top 10 all-time, highest-returning closed positions across all S&A portfolios)
| Investment | Sym | Holding Period | Gain | Publication | Editor |
| Seabridge Gold | SA | 4 years, 73 days | 995% | Sjug Conf. | Sjuggerud |
| ATAC Resources | ATC | 313 days | 597% | Phase 1 | Badiali |
| JDS Uniphase | JDSU | 1 year, 266 days | 592% | SIA | Stansberry |
| Silver Wheaton | SLW | 1 year, 185 days | 345% | Resource Rpt | Badiali |
| Jinshan Gold Mines | JIN | 290 days | 339% | Resource Rpt | Badiali |
| Medis Tech | MDTL | 4 years, 110 days | 333% | Diligence | Ferris |
| ID Biomedical | IDBE | 5 years, 38 days | 331% | Diligence | Lashmet |
| Northern Dynasty | NAK | 1 year, 343 days | 322% | Resource Rpt | Badiali |
| Texas Instr. | TXN | 270 days | 301% | SIA | Stansberry |
| MS63 Saint-Gaudens | 5 years, 242 days | 273% | True Wealth | Sjuggerud |
The stocks I want to buy after a correction...
In today's Digest Premium, S&A Editor in Chief Brian Hunt discusses a strategy to help lock in your gains today... and lists a number of stocks he'd like to buy if we see a short-term market correction...
To subscribe to Digest Premium and receive a free hardback copy of Jim Rogers' latest book, click here.
Is gold bottoming?... The sentiment in gold stocks is negative... Big buyouts in the sector... A couple takeover prospects... Private-equity CEO on the current state of affairs... Sell Amazon?...
When several of our analysts become bullish on the same idea at the same time, you should pay attention.
Last year, for example, Porter, Extreme Value editor Dan Ferris, and Retirement Millionaire editor Dr. David "Doc" Eifrig all told their readers to buy shares of what Dan calls "World Dominators."
These are blue-chip companies like semiconductor giant Intel, software icon Microsoft, and pharmaceutical giant Johnson & Johnson. They dominate their industries, gush cash, and reward shareholders through buybacks and dividends. At the time, these companies were trading at low valuations.
Anyone who bought shares of these companies is sitting on big gains today. Intel is up 20% in the last four months. Microsoft is up 19%. Johnson & Johnson is up 10%.
Today, we have a similar situation in gold stocks...
Several of our analysts think we're hitting a bottom. Hear us out... After considering the information we present today, we think you'll agree that gold stocks are one of the best values in the market today.
In today's DailyWealth Trader, Amber Lee Mason explained why negative sentiment in the gold sector is bullish...
|
In yesterday's S&A Short Report, Jeff Clark told readers...
|
Just this morning, in his real-time Direct Line blog, Jeff wrote...
|
And in today's Growth Stock Wire, S&A Resource Report researcher Brian Weepie noted, "Big gold companies are pulling out their checkbooks... And that's a sign that gold stocks are bottoming."
On Monday, Goldcorp, one of the largest gold mining firms, offered $2.4 billion for Montreal-based Osisko Mining. It's the biggest deal in the mining sector since 2012.
But this isn't Goldcorp's first brush with Osisko... It owned 10% of the company and sold that stake for C$530 million in February 2011. Now it's offering to buy the whole company for half the valuation from when it sold its shares... Goldcorp is taking advantage of the carnage we saw in the gold market last year.
But Goldcorp isn't the only mining firm making purchases recently. More from Weepie...
|
Mining experts say they were waiting for a flurry of buyout activity in the space... and that the purchases could mark the bottom.
As you can see from the chart below, junior mining stocks were crushed last year, falling more than 50%...
Today, large, deep-pocketed miners have the opportunity to buy smaller companies with lots of gold in the ground for pennies on the dollar. Frank Holmes, CEO of resource-investing firm U.S. Global Investors, appeared on an episode of Stansberry Radio last month. Here's what he said...
|
Weepie shared some companies he thinks could be next on the chopping block:
|
Last year was brutal for gold stocks... The Market Vectors Gold Miners Fund (GDX) finished 2013 down 54%. Investors hit their trailing stops and sold in disgust. Even the thought of buying gold stocks today probably makes you groan... But that's exactly when you should be buying.
As we've shown you above, many mining stocks are trading for a fraction of the value of their gold in the ground... We're starting to see some big buyouts in the sector... Sentiment toward gold stocks is still negative... And the fundamentals show we could soon see a big rally. It's a juicy setup.
Our colleague Frank Curzio is also jumping back into gold stocks...
In the January issue of Small Stock Specialist – which hit e-mail inboxes tonight – Frank recommends a little-known gold-royalty stock.
Unlike regular gold stocks, royalty companies don't mine any gold of their own. Instead, they finance lots of early-stage mining projects, then earn royalties on mine production if things work out.
This company is sitting on almost $100 million of cash (and zero debt) that it can put to work financing beaten-down mining stocks.
And even though this firm is producing record sales, the stock has gotten clobbered over the past year. Frank says buying the stock today could lead to triple-digit gains in the next two years.
If you want access to Frank's top name in gold stocks today, you have to sign up for Small Stock Specialist. If you decide Frank's research isn't for you, we offer a four-month, 100% money-back guarantee. Click here to learn more.
David Rubenstein, co-founder of private-equity giant The Carlyle Group, spoke to CNBC yesterday about the state of the private-equity market.
We've talked about two of S&A's favorite private-equity recommendations – Blackstone Group (BX) and Kohlberg Kravis Roberts (KKR) – many times, so we won't revisit the bullish argument in depth.
But these firms dominated under the Fed's monetary policy... They were able to borrow loads of money for next to nothing and buy valuable assets. Because there was more money floating around, these firms gathered more assets under management. And they were also able to mark up the assets on their books and sell them at favorable prices.
Just take a look at this chart of Blackstone, the largest private-equity firm, which Steve recommended buying in the November 2012 issue of True Wealth:
Steve's readers are up 146% as of yesterday's close.
On CNBC, Rubenstein noted that private-equity deals today are "still only about 50% of the dollar volume" from the 2007-2008 period... A sign we could see these shops buy up lots more assets. He noted plenty of financing is still available on attractive terms.
However, Rubenstein noted that it's getting hard to find cheap assets to buy. Just before the crisis, private-equity firms were buying out companies for 9.7 times EBITDA (earnings before interest, taxes, depreciation, and amortization). Today, we've reached the same multiple (after it bottomed around 6 or 7, he said). He said he has to look harder for deals that will produce 20%-30% rates of return.
We echo Rubenstein's sentiments... You can't argue the market is cheap today – it's trading at all-time highs. But the money is still flowing. And as we've seen time and time again, expensive stocks can always become more expensive.
New 52-week highs (as of 1/14/14): Altius Minerals (ALS.TO), American Homes 4 Rent (AMH), ProShares Ultra Nasdaq Biotechnology Fund (BIB), PowerShares Chinese Yuan Dim Sum Bond Fund (DSUM), Energy Transfer Equity (ETE), Fluidigm (FLDM), Gladstone Capital (GLAD), Corning (GLW), iShares Nasdaq Biotechnology Fund (IBB), Intel (INTC), Ligand Pharmaceuticals (LGND), Marvell Technology (MRVL), ONEOK (OKE), Penn Virginia (PVA), Sturm, Ruger (RGR), ProShares Ultra Technology Fund (ROM), RPM International (RPM), ProShares Ultra Health Care Fund (RXL), Sequoia Fund (SEQUX), Constellation Brands (STZ), Skyworks Solutions (SWKS), and Virginia Mines (VGQ.TO).
One subscriber has made huge profits on Amazon... Is it time to sell? Send your feedback to feedback@stansberryresearch.com.
"I bought Amazon at $45 a share a few years back. I think you just told me to sell." – Paid-up subscriber Tony D. Baker
Goldsmith comment: As regular readers know, we are legally prohibited from addressing individual investing questions and offering individual investing advice. However, all we said was that Amazon doesn't justify its outrageous valuation. It's already a $180 billion company. However, as we noted above, expensive stocks can always become more expensive...
Regards,
