It’s a strategy used by hedge funds and private equity firms to reap massive rewards in both bull and bear markets alike.
The idea is simple: Find a stock with a specific catalyst that will lift it dramatically in the near future.
Here are some recent examples:
Netflix (NFLX) has rattled around popular culture long enough to have seen the heady days of Blockbuster. But savvy investors saw the potential of streaming in the internet age before Netflix expanded into original content. Just when investors thought Netflix had run as high as it could, its international expansion saw shares explode -- and NFLX is up 105% in 2018 alone!
After netting Oprah Winfrey, Weight Watchers (WTW) stock spent 2017 in rocketship mode. In 2018, WTW shares are up 124% since January following boffo earnings reports marked by substantial subscriber growth and the company's first Q1 profit in four years.
Etsy (ETSY) didn't have its finest year in 2017. The company was plagued by layoffs and other cost-cutting measures before turning a corner right around the holiday season to increase revenue by double digits. After making some good old-fashioned improvements to its product, Etsy shares have given Amazon a run for their money, up 183% in 2018!
In hindsight, it’s very obvious how to profit. But the trick is getting there first — before other investors start driving the price sky high.
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