As for the stock market, the good news is that the market was up 3% in the first five days of 2010, and history tells us that’s a positive omen. Since 1950, when the stock market has risen over the course of the first five trading days of January, it’s finished the year with a gain 86% of the time.
The average gain was 13.7%, which I think most investors would find satisfactory.
With Cabot’s growth-oriented advisories, we aim to do better, through two techniques.
The first is market timing, the practice of taking cash out of the market when the market’s main trend turns down, and waiting patiently to put it back in until the trend turns back up. Academics will tell you that market timing doesn’t work, but they’re wrong.
In fact, a subscriber (Bob) actually walked into our office last week (a rare occurrence) asking for extra copies of Cabot Market Letter to give to his friends; he’s been touting our value since we persuaded him to sit on the sidelines in the great collapse of 2008-2009 … he says he made 4%, while his friends stood pat and lost big. He also says his grown son tells him market timing doesn’t work!
The second way we beat the averages is stock selection. We want you to own great stocks in bull markets, not mediocre stocks.
So here’s an idea for you.
It’s NBTY (NTY), formerly known as Nature’s Bounty.
Back on October 7, the stock was recommended in Cabot Market Letter. Editor Michael Cintolo wrote, “NBTY is an international retailer of vitamins, minerals, herbs, sports supplements and diet aids, about 25,000 products in all, which it sells through mass merchandisers, drug store chains, supermarkets, health food stores and other outlets. It also operates its own chain of over 440 Vitamin World and Nutrition Warehouse stores. The chart for NTY shows a strong rally in April and another in July. Each represents an earnings report that beat analysts’ expectations. The stock built one nice base at 37 in August and then put in another base around 40. Business is improving in a hurry and the stock’s tight trading tells us higher prices are likely. BUY.”
Since then, the stock has climbed from 40 to 45, for a gain of roughly 13%.
Also, last week the company announced preliminary results for the quarter ended December 31, saying revenues were up 14%.
I like the fact that millions of baby-boomers are looking for the fountain of youth in vitamins and supplements.
I like the fact that the company is dominant in the industry; when it sees a brand it likes, it acquires it.
And I like the chart, which is climbing slowly and steadily upward. Volume trends indicate that buyers are still in control.