In Dante’s Inferno section of The Divine Comedy, the poet describes fallen angels as those who have fallen from grace and, although once beautiful, are now monstrous demons.
That strikes me as an apt description for the class of stocks that I describe as fallen angels. These are companies that were once considered blue chip or growth darlings that have fallen monstrously out of favor with Wall Street and investors.
These are stocks that were once widely owned and if not loved, at least admired and respected, but something went drastically wrong for these companies and the share price plummeted into single digits.
In most cases investors sold too late and lost a bunch of money along the way, often creating a cloud of ill will and outright distrust for these companies. To most investors' eyes, these are stocks that should be avoided at all costs.
To me, though, they are diamonds in the rough—and I LOVE finding them. Indeed, in my winning Breakout Stocks service, these are one of the four types of stocks we focus on. (And, boy, is our strategy paying off! Of the 24 stocks on our current Buy List, an amazing 17 have delivered double-digit gains in the first two months of 2012 alone. Overall we’re beating the market by 3-to-1!)
All too often when a stock begins to fall, it becomes a self-perpetuating cycle. Investors begin to exit a stock, and then the large funds throw in the towel and sell, pushing the price below $10.
At this point, a lot of the more conservative institutions whose investment policies prohibit owning stocks priced below $10 are forced to sell, and the price goes lower still. Analysts from the larger brokerage firms stop covering the stock, and there is a lack of new buying interest from investors. As the herd moves on to other ideas and new sweethearts, these stocks can be left to languish.
Ninety-five percent of these stocks will stay in the gutter forever. But the other 5%—well, that’s where some truly gargantuan profits can be made if you know how to separate the winners from the losers.
How to Spot Fallen Angels—
Before Their Share Prices Rocket!
When it comes to identifying true fallen angels, there are two key questions you need to ask.
The first question is what went wrong?
- Did management over diversify the basic business and expand into areas where they had no expertise or advantage?
- Did the company borrow too much money and is now having a hard time generating sufficient cash flow to service their debt load?
- Has a competitor surpassed them in the marketplace?
- Has there been a change in consumers’ buying habits and preferences that have left the company behind?
- Have there been accounting irregularities or regulatory issues that the company must put behind it in a satisfactory manner before the company can return to profitability?
- Are there customer or supplier lawsuits weighing on the company and its stock price?
The list of problems, mistakes and management stumbles that make a once great company into a fallen angel are legion. Before you can even consider investing in a fallen angel stock, you need to know exactly what went wrong and who is responsible for the problems.
The next question then becomes can it be fixed?
- Can the company shed itself of unprofitable divisions or subsidiaries that take away from the core business?
- Can management regain focus and catch back up to its competitors?
- Can the company generate sufficient cash flow to pay down its debt or can the balance sheet be restructured in a fashion that allows a return to profitability?
- Can regulatory issues be solved without permanent harm to the company?
- Can they maintain a reasonable relationship with key suppliers and customers until the current crisis has passed?
- Are the accounting and regulatory issues mistakes or are they fraudulent or criminal activity?
- Can their products and services regain acceptance from consumers?
Once we figure out what has gone wrong, we need to figure out if the problems can be fixed. If so, we have a candidate for a fallen angel stock and, as I said, this is where you can make truly life-changing profits. I’ve spent 25 years netting doubles, triples, five- and even ten-baggers in fallen angel stocks trading under $10. I’d like to help you do the same.
Buying Opportunity of a Lifetime
Truth be told, today I am just giddy with anticipation. That’s because I have NEVER seen a better buying opportunity in select under-the-radar stocks than I do today.
In my Breakout Stocks service, we’ve just uncovered two new gems that I fully expect to deliver eye-popping triple-digit gains in the next 3 to 6 months. They are poised for a huge breakout, but you can still get in on the profits ahead—if you act quickly and join us now RISK-FREE.
Remember, when these fallen angels turn around, they move FAST—so you’ve got to be ahead of the curve to get the lion’s share of the profits. Join us now, and you’ll get the names of ALL our winning breakout stocks, including:
- The little-known freight company poised to skyrocket under new management. Its new owner has a long track record of building many multibillion-dollar companies. This dynamo posted rock-solid results through the Great Recession, but I expect it to soar thanks to new leadership and a continued economic recovery.
- The cheapest—and smartest way—for you to profit from soaring oil prices. This $4 oil exploration and production company is a screaming buy at today’s bargain-bin price—get on board now.
I have no doubt that fallen angel stocks are one of the best opportunities to make life-changing wealth in the stock market. But I don’t mean to suggest that finding them is easy.
To be sure, when you start to ask the questions I outlined above, you will find more demons than angels. That’s why I started Breakout Stocks Under $10…so you wouldn’t have to go it alone.
I have a 25-year track record of succeeding with these breakout stocks. I became a self-made millionaire by the age of 30 by finding knockout winners such as Dendreon (up 1,491%—no, that is not a typo), Crocs (up 362%), Priceline.com (up 387%) and Starbucks (up 164%).
And now, in my Breakout Stocks service, I’m helping a small group of investors just like you earn their own life-changing profits. We are beating the market 3-1 so far in 2012, and today we’re scooping up a handful of stocks that I expect to hand us triple-digit profits in the next 3-6 months alone.
So please, join us now RISK-FREE and get the names of every single stock on our current Buy List. Then, follow our progress over the next 90 days and judge for yourself. If you’re not completely convinced that I can help you spot fallen angels that could at least double or triple your wealth, you can cancel my service and get 100% of your money back.
PLUS, I’ll give the first 50 people who respond to this invitation a FREE copy of my book, “The Little Book of Big Profits.”
Act now…while our newest breakout finds are still ripe for the picking. Join here today!
Our Breakout Stocks are truly on fire, beating the market by 3-to-1 since the start of the year! Don’t miss out on the wealth-making profits ahead! Join us now RISK-FREE and get the names of every single stock on our current Buy List. And remember, these stocks move fast—they can give you whiplash on their quick turns back up, in fact. So please, act today while you can still get in on the ground floor of these tremendous wealth-creating opportunities I’ve just uncovered. Join now!