10 Best Revolutionary Stocks
When I was a kid, these signs were affixed to the buildings where you were supposed to hide when the Russians started dropping atomic bombs.
They never did.
But the proliferation of these signs on public buildings was a sign of how seriously the threat was taken. Even the building Cabot occupies now-originally a public library-once sported a fallout shelter sign.
Today these signs are rare-but it's not because the threat is gone. By numbers alone, in fact, the threat has increased! Russia now has some 8,000 nuclear warheads, while China, India, Pakistan, Israel and North Korea have joined the club.
But few people worry about nuclear fallout anymore; we've grown accustomed to living with the threat, just as people who live next to a dormant volcano for many decades grow complacent.
This reminiscence about fallout shelters was triggered by two movies about dystopian futures that I saw recently. Dystopian cinema (or literature, for that matter) is not one of my preferred genres, but in the interest of family relations, it was a good use of my time.
And the interesting thing about these movies is that both were depicting the very challenging future that lies ahead after the earth succumbs to the forces of Global Warming.
I interpret this not as coincidence, but as a sign that many people today see Global Warming (or Climate Change, if you like) as the biggest threat facing mankind.
I'm not going to argue with that-and I definitely don't want to get into politics here-but I will say that generally:
Recognizing the problem is half the solution.
Furthermore, as one of my favorite buttons puts it:
So, the fact that the problem of Climate Change is well recognized AND that so many people are working hard to solve the problem means to me that the problem WILL be solved, and therefore that I should not worry about it.
Which is not to say that I'm not doing my part. I drive a totally electric car that gets the equivalent of 89 miles per gallon and next year I'll be putting solar panels on my house.
Both use technologies that were in their infancy back when fallout shelters were all the rage, and I fully expect that scores of additional technological solutions will be developed to help us deal with both the causes and effects of Climate Change.
Furthermore, I fully expect that technology will continue to improve our lives in ways we can barely dream of-not least because we're too busy watching disaster movies to envision a vastly better future.
As Evelyn Waugh put it, "The human mind is inspired enough when it comes to inventing horrors; it is when it tries to invent a heaven that it shows itself cloddish."
So today-in part to counteract all that worry about Climate Change and in part to get you excited about the better world to come-I'm kicking off an update of a series I last ran in the summer of 2013, featuring 10 Revolutionary Stocks that are poised to not only improve the world but also bring big profits to early investors.
This time around, of course, they're new stocks-mostly.
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10 Best Revolutionary Stocks
Revolutionary stocks are not just fun to think about-they can be extremely profitable for early investors.
To find revolutionary stocks, start with these rules.
Rule #1 when hunting for revolutionary stocks is to ignore valuation. Wall Street likes to count things, and price/earnings ratios are one of their favorite measurements. But investors who focused on PE ratios missed the greatest growth years of Amazon, Google, Microsoft and Qualcomm.
Rule #2 is to use your imagination. This is difficult for most investors. It's much easier to look back than look ahead. But ahead is where the big profits are. In the case of Amazon, having the imagination to see that the little company might actually put Borders out of business was key.
Rule #3 is to pay attention to management. It's my contention that the best revolutionary stocks are those of companies led by visionaries. In fact, just off the top of my head, I made a list of the revolutionary stocks of my lifetime. Most-perhaps all-were led by exceptional managers: Apple, Blockbuster, eBay, Google, Green Mountain Coffee Roasters, Home Depot, IBM, McDonalds, Microsoft, Netflix, Oracle, Research in Motion, Starbucks, Tesla Motors, Teva Pharmaceuticals, Walmart, Whole Foods, Yahoo! and Xerox.
Rule #4 is to invest only when there's potential for a major increase in perception. If you invested in Amazon (AMZN) when Jeff Bezos was on the cover of Time, you lost money. Similarly, if you bought Apple (AAPL) when it made headlines as being the most valuable company in the world, you lost money. To make big money, you've got to invest when skepticism is high!
For example, in December 2012, when Tesla Motors (TSLA) was trading at 34, JP Morgan initiated coverage on the stock and gave it a price target of 37 for December 2013. That's a whopping 8% advance in 12 months. JP Morgan, of course, is very good at counting things. But they're not very imaginative! And they, like many investors, were skeptical of what Tesla could achieve.
At the same time, I had the stock rated buy for my Cabot Stock of the Month readers (the earliest got in at 29), but with no price target. And I kept it rated buy in the months that followed (as TSLA skyrocketed), remembering the lessons I learned investing in AMZN and other great stocks. Today, my readers are looking at profits in TSLA of over 650%, and they're holding on for more.
But should you buy it now?
More precisely, considering the fact that TSLA has become much more highly regarded over the past two years, is Tesla still one of the best revolutionary stocks to buy? Or should you look elsewhere?
I am currently in the process of compiling a list of the best revolutionary stocks to buy now. I started this process by asking all the Cabot analysts to submit a few candidates. After reviewing them, and narrowing the list down to 10, I will present the list, in alphabetical order, over the next 10 weeks.
Maybe Tesla will make the cut, maybe not. Either way, it will be interesting.
In the meantime, I recommend that you take a risk-free subscription to Cabot Stock of the Month, to get my latest advice on not just Tesla but on every stock in my portfolio. As our lowest-priced service, Cabot Stock of the Month is a great introduction to the Cabot family of investment advisories.
Yours in pursuit of wisdom and wealth,
Chief Analyst, Cabot Stock of the Month
Publisher, Cabot Wealth Advisory