1 Catalyst for Long-Term Profits
We push our kids pretty hard … We want to help them find their true potential.
Hauling them to practices, private lessons and games isn’t just for fun. We do it because we see the value in it.
We know our kids won’t see success overnight. But when they do, they can begin to achieve what we’ve only dreamed of for them.
We’re living for that moment that the kids realize their potential and run with it.
That’s the end goal.
We see it in life from generation to generation.
Maybe that’s why some investors take the slow approach, too … They like buying a stock that is counted down and out by everyone — except the people who are willing to put the work in.
Sounds a lot like raising kids.
And it’s equally as satisfying for the investors who are able to capitalize on those opportunities.
We’re all looking for those moments when something realizes its potential and runs with it.
And there’s one way to spot these moments…
“I Was Blown Away”
I just watched my colleague Charles Mizrahi’s presentation, Profits of a Lifetime, and I was blown away.
It was like a light switch turned on.
It turns out that long-term investors don’t have to wait decades to realize the potential of a stock.
In five years, sometimes less, you could see a lifetime of profits.
But here’s the thing: It’s still all about seeing that moment where motivation to unlock value kicks in.
Like I said, every parent lives for this moment. And when we talk about long-term investing, that one moment can set you up for massive gains.
Last week, I talked about the moment when Papa John’s turned things around.
For that company, it was the activist fund, Starboard Value, coming in and unlocking the potential that the company had sitting right in front of it.
Once the activist fund had a say in the company, shares rallied higher than ever.
That was the sign the company was ready to unlock its true potential.
Another example is something that comes without any activist investor…
It’s a special situation that doesn’t come around that often.
But when it does, it can be another moment that signals a company is realizing the value sitting right in front of it.
I’m talking about spinoffs.
Follow the Success of Spinoffs
This is where a company takes a division within the company — meaning it’s already a successful business — and spins it off into its own entity.
It creates a brand-new company for investors to pour money into.
And the potential for investors is enormous … if you know where to look.
Take eBay and PayPal for example.
The eBay website is an online marketplace for consumers to sell stuff. It’s retail.
But PayPal is much more. It’s a unique way for people to send funds back and forth — a payment platform that grew out of eBay itself.
Investors wanted more exposure to the payment side of eBay. So they lobbied for the company to spin PayPal off.
At this point, eBay realized the success of the payments system and was willing to give investors what they wanted.
It would be a win for investors and for the companies involved. PayPal would now be able to focus exclusively on payments while eBay focused on the retail site.
And it worked like a charm.
PayPal, the spinoff stock, is up more than 400% since that split five years ago. The parent company, eBay, has seen its shares nearly double since then.
The spinoff moment is the point the company unlocks its potential value.
It’s the moment some long-term investors will wait decades for.
But right now, Charles has not one … not two … but three special-situation stocks ready to climb higher that he wants to get you in on before it’s too late.
Think of it like getting all the success from a kid that makes it to the NFL … without having to wait the two decades to get them there.
These stocks Charles has lined up are set to take off in a matter of just a few years.
Chad Shoop, CMT
Editor, Quick Hit Profits
Investing has consumed my life since college. While double majoring in finance and economics at the University of North Carolina at Greensboro, I founded the university’s economics club, joined the finance club and participated in the Chartered Financial Analyst research competition to represent our school.