Here is a concept that is very important in the market—and I even saw it at work just last week when the Dow Jones Industrial Average (DJIA) finally kicked out three old duds.
Many times I look at portfolios that are transferred to me and see a similar situation—I see a portfolio that is full of stocks of yesteryear. Well, I personally would rather own the Best Stocks Now™, not of yesteryear!
I will illustrate this point by using the analogy of Wal-Mart (WMT), a behemoth out of Bentonville, Arkansas. There’s probably a Walmart within driving distance of your home and you’ve probably visited it within the last 30 days. Walmart is everywhere! The problem is, it’s gotten so big that it eventually becomes a math problem.
Now I’m a mathematician, a number cruncher—numbers are very important to me. I’d much rather see the numbers of a company, than a CEO flapping his mouth on the news telling me how good his company is. My point is that at one time, Wal-Mart was a great stock!
But today it is no longer a double-digit grower-it is a single-digit grower.
Wouldn’t you have liked to have bought Wal-Mart in the early days? Back when it was a Best Stocks Now ™?
So I look for companies today that are like WMT was in its early days; WMT was once a fast-growing company that was filtering in across America and still had room to grow!
Much like Dollar Tree (DLTR) is doing today! Dollar Tree (DLTR), a stock that I wrote about back in 2011 in my book Best Stocks Now!™ Companies such as Dollar Tree have exploding earnings, are performing way better than everyone else, AND they’re STILL undervalued!
Stocks like this may never end up in the Dow Jones Industrial Average, but it if can from say its current market cap of $12.8 billion to $20 billion, I would be OK with that. I have already made 142% in the stock once.
The first time around with DLTR, I more than doubled my money. Then the shares started to cool off and I moved on. Well it started heating-up again earlier this year so I got back in, and it’s on the move once again!
DLTR is a stock that I currently own in my conservative growth accounts. It is a $12 billion company—a little, tiny, large cap stock. By contrast WLMT is a mega cap stock at $244 billion.