Grow your $1,000 to $ 1 million
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.
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.
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.
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.
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. Source: Asia One