Sounds too far-fetched? We'll show you how, if you have a grand to spare.
It won't be easy - but it's not impossible. With some stocks growing more
than a few hundred times since their IPO prices (think: Apple), it's quite
possible!
The key is in spotting the cash cows early. Here are the signs to look out
for
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1. SUSTAINABLE COMPETITIVE EDGE
Look for a company with an economic "moat" of some sort, says Paul Larson, an
equity strategist. The company should continuously outdo competitors and
maintain profits.
A company's "brand power" could give it a steady edge. People trust
Coca-Cola, so they're willing to pay more money for it, even though a generic
cola is essentially the same.
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2. OWNERSHIP OF A DEMOGRAPHIC
Look for a company that's targeting a particular market.
If it's well positioned to dominate, the odds of success are good, says Andy
Obermueller, a portfolio strategist.
If a company has potential access to an underserved market, it also has
access to untapped wealth.
Take Urban Outfitters. It created a blueprint of expensive sweatshirts and
denim that tapped a valuable market of affluent youth.
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3. SCALE
The business has to have the potential to grow, grow and then grow some more,
says Obermueller.
When you find a company with a market that seems endless and a product that
is innovative, you likely have found a winner.
Consider Green Mountain Coffee. It jumped on the Keurig cup idea early and
captured much of the market.
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4. DISRUPTIVE TECHNOLOGY
Look for patents - a company's ownership of intellectual property gives it
pricing power.
The archetype for disruptive technology is a drug company with no revenue -
and no product but a strong drug in development.
When that drug is granted US Food and Drug Administration approval, the
company can become a billion-dollar business, says Obermueller. This happened
with Genentech in the early 1980s. |
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