3/7/2013
Please stop watching Apple and worrying about Apple ($AAPL), if you own the stock at a higher price, I am sorry sell it, its a dog, and instead look at these 3 hot small cap stocks which could easily double in the next 3 to 4 months.
Every week I scan through over 200 charts looking for sectors and stocks that are breaking out, and last night I found some real gems.
First many of the sectors that have been left for dead, Solar, Shipping and Newspaper stocks are starting to break out of an almost 3 year down trend. This is very important for many reasons, first off it shows that the current stock market rally has breadth , and that many of the sectors that were left for dead years ago are actually starting to trend up, another bullish sign for the market.
Secondly the biggest money is always made jumping on sectors or industries that are just starting to break out, remember almost 30% of reason a stock’s move up or down is because the sector or industry its in, so you need to be in sectors that are trending and breaking out.
With that being said, lets go into the 3 stocks that I think can double in the next 3 or 4 months.
1) Solar Stocks- Almost all of the major stocks, Sunpower (SPWR), First Solar (FSLR), Trina Solar (TSL) and Canandian Solar (CSIQ) are up more than 100% from the bottom over the last 3 months. This type of move cannot be ignored, when you see almost all every stock in a group such as (Solar) all breaking out at the same time, it is an incredibly bullish sign. Yet there is one Solar stock that stands out for 2 reasons, and I believe it is the one that could double in the next 3 months and that is Trina Solar. Trina Solar has the best balance sheet by far of any solar stock, so it has no bankruptcy risk even though its only a $4.17 stock. Secondly a Billionaire Hedge Fund Mt. Kellet, run by a former top Goldman Sachs Trader, owns almost 4% of this stock, a very bullish sign. My price target on this stock based on valuation and chart points is around $9.50 ( to see my charts and chart book you can email at wmeade@purealpharesearch.com)
2) Newspaper Stocks- Not only have most newspaper stocks been trending higher over the last 9 months, but you just had the Second Wealthiest man in the World, Mega Billionaire and Investing Legend Warren Buffett come out and say that he has been on a buying spree for local newspapers, and thinks there is tremendous value in local newspaper stocks. The one newspaper stock in this group that stands out is the McClatchy Company ($MNI), a company that owns more than 30 local newspapers, including the Sacramento Bee, Miami Herald and Kansas City Star, not to mention the company also owns many popular websites such as: Cars.com, Apartments.com and Careerbuilder, all of these properties for a stock that sells for only $2.77. My price target on this stock is $5.60, just based on a simple break up value of the company. Secondly this stock is also owned by one of the top performing Billionaire Hedge Funds Blue Mountain Capital, Bue Mountain owns almost 8% of this stock.
3) Shipping Stocks, Shipping and Tanker stocks have literally been dead in the water (no pun intended) for almost 6 years, every since the end of the commodity boom in 2007 these stocks have done nothing but go down. But in the last 6 months there has been a huge trend break in almost all of the major shippers, and when this happens I look for the most undiscovered small cap and highest beta shipping stocks that have the biggest potential to go up. Remember a rising tide lifts all boats, so as long as Shipping and Tanker stocks continue to trend higher, you want to be in the highest beta small cap names, because they will go up the most. My favorite by far in the Shipping Group is Eagle Bulk Shipping ($EGLE), this stock has the potential, based on its chart easily go to $7, and its a $2.18 stock, that is a huge potential winner. To see my chart on Eagle Bulk shipping, email me at wmeade@purealpharesearch, I am telling you the chart on thie stock is mind boggling.
Will Meade
Editor of the Billionaires Portfolio