Editor’s note: One of the great things about working with Charles Mizrahi is things like this. He’s been in this business for so long, he can take a glance at a market and tell you what’s going on.
We published this issue early in the pandemic, and it hasn’t aged a day. The same ideas still hold true.
That’s why we’re bringing it to you again. There’s no time like right now to prepare to profit. When this pandemic is over, the companies he talks about will soar. Read below… — Annie Stevenson, Managing Editor, American Investor Today
Investors who trade based on emotion usually get hosed.
In fact, we should label them for what they really are: speculators and gamblers.
This pandemic is making it easier to tell the investors from the speculators, because real investors know to ignore the market’s wild price swings.
They don’t get overly excited on the up days. And they don’t get overly depressed on the down days.
This doesn’t mean that smart investors aren’t still playing the game.
They’re simply buying into companies immune to the coronavirus pandemic … or those that will do well once the country is up and running again.
In today’s video, I tell you about two companies that fall into this second category.
Not only are they great businesses, but they’re trading for steep discounts due to the coronavirus panic — meaning now’s the time to buy into them.
Watch my full video below to learn about the four things that every great business has in common.
And stay tuned until the very end to hear about these two phenomenal companies — and why they’re such a great value right now.
Check out my latest video where I discuss 3 ETFs to buy during the 2020 stock market turmoil.
The COVID-19 Bear Market
Right now, there are two stock picks that Wall Street put in the unloved and unwanted pile. These stocks are trading in industries that Wall Street hates. But they’re two great businesses trading at attractive prices.
And when this shutdown is over, when the government lets business get back to being business and gets the country running the way it should be — and people are allowed to go out of their houses — I think these two stocks are just going to soar.
The COVID-19 bear market … I don’t know how bad it will be, but I will tell you this: It’s not going to be here in another two or three years. So, smart investors plan now for the future.
We are seeing large-cap stocks — stocks that have market caps in the $10 billion to $50 billion range — trading like penny stocks. There is tremendous volatility.
In the real world — a private business, for example — the worth of a business doesn’t change by 10% in one day.
Yet simply because they have a ticker, many stocks of great companies in the market have had a 100% or 200% spread between high and low just over the last five weeks. Absolutely ludicrous!
However, that is to our advantage. Let the traders try to guess every wiggle and jiggle of the market and try to figure out where stock prices are going to be over the short term.
That’s not the game we play. We don’t let stock prices tell us the value of a business. Those traders are not using fundamentals, but emotions.
And trading on your emotions — fear and panic on one end and euphoria on the other — is no way to make money over the long term.
Pick Stocks With your Head, Not Your Gut
In fact, in my 37 years, I have not found anyone that has made any considerable amount of money trading on their gut. It just doesn’t work.
Now, I don’t have a crystal ball. I can’t predict the future — and if I told you I could, I’d be lying to you. But I can use the decades of experience in what happens during times of fear and panic, and what happens when those times are over.
My crystal ball is hazy over the short term, but much clearer over the long term.
Time after time, the winners during periods of panic and fear, due to the tremendous volatility in the marketplace, are the long-term holders — those who buy bargains and sit on their asses. It’s that simple.
I saw it happen in 1987 after the crash, in 2000 after the dot-com bubble burst, in 2008 after the financial crisis … And I could almost bet you, dollars to donuts, it’s going to happen again.
I’m going to share two stocks with you that should do very well once the world opens back up, simply because these stocks are positioned well. They’re in great industries, and they have four things in common.
No. 1: They’re great businesses. These stocks — like all stocks — are nothing more than pieces of a business.
I buy a stock the same way I buy a private company. I evaluate the company, see what it’s worth based on the earnings or based on relative value to other companies in the industry and then see if the stock price is trading above or below that. It’s that simple.
No. 2: I want to find a company in a growing industry. It’s always better to own a company that can get a slice of watermelon instead of a whole grape. Companies that take just a small sliver of a huge industry could mean huge revenue and huge earnings.
No. 3: I want to find a company with excellent management. It still needs a captain to pilot the ship.
No matter how great a business is, you always want to check that management is doing a great job, and that they had a finger on the pulse the whole time.
No. 4: I want a company trading in an industry that’s unloved and unwanted by Wall Street — in other words, thrown in the garbage pile. That’s where you get your best bargains.
Wall Street Is Missing Out On Retail
And the two companies I’m going to share with you are both in an industry that Wall Street just doesn’t like … and that’s retail.
1 – TJX Companies Inc. (NYSE: TJX). TJX operates T.J. Maxx stores, Marshalls and HomeGoods. They’re one of the largest off-price retailers.
They have been adding retail square footage in recent years. While most retailers are closing up or taking back footage, this company is expanding.
The whole thing about TJX is the thrill of the bargain. That brings shoppers, and it can’t be replaced by online experiences.
The company continues to thrive in the age of Amazon.
2 – Ross Stores Inc. (NasdaqGS: ROST). Ross Stores is the largest off-price home fashion retailer in the U.S.
They operate two brands: Ross Dress for Less, and dd’s DISCOUNTS. Same deal. They give you famous brands for discounted prices.
Once again, it’s the thrill of the hunt.
A store environment that drives the customers is something that you can’t get on Amazon or online. They buy a wide range of products, all at low prices. They mark those products up less than specialty stores, and the customers come in and buy by the bushel. That’s it.
They also do another thing … They keep operating costs very low. Every time I’m in a new town or traveling on business, I try to find a Ross store. I walk in there, and it’s always the same deal. Not many salespeople.
Now, they have self-checkout, one security guard and a couple of salespeople. They keep their operating costs really low.
Remember To Look For Businesses That Are Sound
So, summing it up … The key to making money during times of uncertainty is to find great businesses that are financially sound trading at attractive prices. Because when the economy picks back up again, off-price brands are going to do especially great.
After 2008, people who were hurt financially due to the crisis started to spend in retail. Where do they start to spend? Off-brands. That’s where I see that happening all over again right now.
So, there you have it. TJX and Ross Stores are two great companies in an industry that Wall Street doesn’t like. And that gives us the opportunity to buy them at great prices.
Editor, Alpha Investor Report
P.S. Charles is on a mission to help every investor take back their financial freedom. He has launched the American Prosperity Summit with that in mind. It’s his way of giving back to his community — by showing average Americans the best ways to make profits in the markets. He is teaming up with a celebrity guest to bring all this education to you.
Who is it? Click here to find out.