Keith’s note: I have a special treat for you this week. In place of my usual editorial, we’re sharing an exclusive essay from my friend — and TradeSmith Senior Analyst — Mike Burnick.
If you’re not familiar, Mike is a 30-year market veteran and world-class analyst who joined the TradeSmith team last winter. And when it comes to finance and investing, Mike has truly done it all…
He got his start in the banking business. He was a successful Wall Street broker. And for many years, he was a sought-after private investment adviser for high-net-worth individuals. Mike has even managed his own multimillion-dollar mutual fund.
Mike’s resume speaks for itself. But what really impressed me about him wasn’t his experience or skillset. It was his character.
Unlike some highly successful financial professionals, Mike is a genuine person who cares deeply about helping others succeed. And he’s made it his life’s work to help everyday folks grow and preserve their wealth with the same kinds of tools and strategies typically only available to the wealthiest investors.
We originally brought Mike to TradeSmith for his income-generation expertise. And I couldn’t be happier with the results he’s produced for our customers so far.
But as you’ll see below, Mike is far from a “one-trick pony” when it comes to generating big, safe returns in the markets…
Meet the ‘Double-Your-Money’ Stock That’ll Give You the Upside of Growth with the Safety of Value
Here at TradeSmith, I’ve quickly become known as “the dividend guy.”
I’m not upset about that – I actually view it as a compliment.
I view high-quality dividend stocks as the bedrock of any portfolio. We’re talking about companies with dominant market positions, pricing power, and a long history of steadily growing cash flows and shareholder payouts – things you want and need in a market and economy as tough as the one we’re working through now.
Owning strong dividend payers is one of the best ways to dodge the downside while keeping up with inflation over the long run.
But I haven’t given up on growth.
When circumstances are right, growth stocks can pack a punch unlike any other standard-fare investment play.
Those circumstances haven’t been “right” of late.
But their time will come. And while it’s probably too early to start buying growth plays right now, here’s something you have to keep in mind: Many of the nameplate growth plays have been pounded down to price levels – and valuations – we haven’t seen in years.
The companies I’m talking about are great businesses, too: They have great brands, outstanding products, provide critical services, and have longstanding connections with their customers.
These are factors that can translate into hefty long-term gains – once our TradeSmith tools give us the “green light” to buy.
In the meantime – and I’m talking “right now” – there’s another group of stocks you’ll want to zero in on.
There’s a nifty cadre of companies that combine the best features of defensive dividend plays with the innate power of growth firms. The shares of these companies are typically less risky than pure growth plays – while offering a significantly higher upside potential than traditional “Steady Eddie” dividend payers.
Essentially, what I’m looking for are high-quality stocks with “double-your-money” potential.
One I’m looking at right now is Marriott International Inc. (MAR).
Based just outside of Washington, D.C., Marriott is one of the most dominant players in America’s hotel industry. It has 30 unique brands and more than 8,000 properties across 139 countries and territories, and it caters to customers across all income levels.
If you do any traveling at all, I’d wager you’ve stayed in a Marriott property at some point.
Like all businesses in the travel and hospitality industry, the company’s finances were hammered by COVID-19 shutdowns. But Marriott is bouncing back – and that rebound is repowering the company’s financial results.
The company has beaten the Street in three of the last four quarters. That bodes well considering analysts expect EPS of $5.95 this year, a whopping 86% increase from $3.19.
According to Standard & Poor’s Global data, that puts Marriott’s fair value at better than $250 per share – or a gain of more than 63% over where the shares are trading at right now.
That’s pretty close to “double-your-money” territory – putting it on my radar.
TradeSmith’s proprietary tools right now also have a favorable take on Marriott’s stock. It has a “Bullish” rating in our system. And though it’s currently in the Health Indicator Yellow Zone – which technically makes it a “hold” rather than a “buy” – it has avoided the Red Zone fate of the majority of stocks in the S&P 500.
Finally, the company recently resumed paying a dividend, which it understandably paused during the COVID-19 pandemic. Before that, however, it had steadily increased its quarterly payout for a full decade.
In other words, Marriott is a “double-your-money” stock I would be happy to own today – although devotees of TradeSmith’s analytics may want to wait for it to hit the Green Zone before buying.
This is a company that has that dominant market share and strong brand name that we look for in defensive plays. But it also has that “double-your-money” potential that is the purview of true growth plays.
But there’s another way to play this – one that will give you even greater gains than just buying the shares outright.
You see, Marriott is also an ideal candidate for one of my favorite strategies.
I’m talking about a simple-to-follow approach that lets you make even bigger gains from these kinds of double-your-money stocks.
Not just a little bigger, either – I’m talking about 4x, 5x, or even 6x gains. And you can do it while risking just a tiny fraction of what it would cost you to buy shares directly.
For instance, with a stock like MAR that has the potential to double, we’re talking about an investment that gives you a very real shot at gains of 400%, 500%, or even 600%. And again, you can capture these gains while risking significantly less of your hard-earned money.
In fact, thanks to the current bear market in stocks, many companies’ “alt shares” are cheaper today than they have been in years, if not decades. For example, in this case you could invest in MAR’s “alt shares” for roughly 80% less than it would cost you to buy the stock directly.
Better yet, it’s simple enough that just about any investor can learn it. And I’m holding a special event next Tuesday, July 26, at 8 p.m. Eastern to help you do just that.
During this FREE event, I’ll personally walk you through this strategy and show you how you can put it to work for yourself. You can learn more and reserve your spot right here.
I hope to see you there.
Senior Analyst, TradeSmith