So how do you find a hot stock? Watch charts, of course, and pay more attention when you find a young unknown company that’s growing fast.
In 2006, Crocs (CROX) was the ticket. People thought their shoes were funny looking, but they sold like hotcakes, profit margins were excellent considering the industry, and as perceptions improved, the stock doubled in its first year.
In 2007, First Solar (FSLR) was a huge winner. Virtually unknown at the start of the year with just 50 mutual fund owners (and in a relatively tiny industry), its screaming growth and a public eager to embrace alternative energy spurred the stock to a gain of 850% in the year.
2008, of course, was a bust except for a few commodity-related stocks in the spring. We latched on to Continental Resources (CLR), for example, for a big gain. While the year was enormously educational, I’m glad it’s gone.
Now I have great expectations for 2009, and I’m confident the best performers will once again be stocks of companies that are not well loved and that are mostly unknown!
In recent issues I’ve recommended several medical companies that are focused on genetic science, and I still think highly of them. Growth trends are very good, and the charts tell us investors are slowly discovering these companies and getting on board.
And today I want to give you another name in the medical field.
It’s Thoratec (THOR), and it was last mentioned here on December 11, when it was trading at 28. Today it’s just a little higher, so it hasn’t gotten away. But the stock’s main trend is up, and thus the odds are very good that the stock will break out above its recent high of 33 before long (as long as the market cooperates).
The company’s business is artificial hearts and heart pumps, a business where demand is driven by unstoppable demographic forces. The stock was featured in Cabot Top Ten Report on December 22, and here’s some of what editor Michael Cintolo wrote:
“For heart patients awaiting transplants, Thoratec’s HeartMate ventricular assist pumps are a literal lifesaver, helping one chamber of the heart pump enough blood until a donor is found. The big buzz now is that patients too ill for transplants have a significantly higher chance of long-term survival (without suffering damaging strokes) when they use Thoratec’s HeartMate II rather than the older HeartMate XVE. The company is waiting for FDA approval for this new usage, and investors are anticipating that it will be received. In the meantime, Thoratec has replaced Dun & Bradstreet in the S&P MidCap 400 Index and U.B.S has picked up coverage of its stock. Everything seems to be breaking Thoratec’s way.”