NOTE: I expect to release the August edition of the newsletter within the next few days. Hint: It's a drone technology stock, and a profitable company. There are always risks with the stock market, but if everything goes right, I think the shares can double over the coming year.
I think it was the famous 1920s trader Jesse Livermore who said...
"Money is made by sitting, not trading."
And so it is with Moderna (MRNA), up +5% in yesterday's session, which I said as far back as January 4 on Youtube I expected the stock to double or triple in 2021. From that point to now, we're up +271%.
When I started the GBR premium newsletter on March 4th, it was my first official pick. From that point, we're up +192%.
So we've been Livermore-style "sitting" - or HODLing, holding-on-for-dear-life, on this stock for many months.
Watch the video or keep reading below!
I've written and talked so much before and since about the opportunity presented by owning Moderna's shares, I don't see any harm in making the original newsletter edition available to everyone beyond premium subscribers:
Not every stock idea turns out that way. Before hubris goes the fall - when we're at our most over-confident as investors is when we're likely to fail and fail big.
But yeah, it's nice when an investment works out so well, and so quickly (insert smiley-face here!)
New Trend Higher?
MRNA's latest earnings report is due out tomorrow (Thursday) morning at 8am ET.
Analysts are expecting profits of $5.86 a share. I think the company could report sharply higher numbers in excess of $6. My guess is the rest of Wall Street expects bigger numbers too - and why the stock is trending higher in the lead up to the earnings release date.
As you can see in this table, the earnings numbers only get larger through the remainder of the year:
Any surprise "beat" is a good thing, just keep in mind that - when a stock like this trends higher - the level of volatility rises. In other words, the stock begins to fluctuate a lot more (and in both directions).
So if the company reports strong earnings and it opens sharply higher, don't be surprised if it proceeds to go down instead of up for a bit of time. Occasional selloffs within a broadly 'uptrending' stock are normal, and keep the trend alive by keeping the greedy eagerness of traders from getting too out of hand.
I'm already on record as expecting the stock to hit $600 to $1,000 a share over the next 12-18 months.
The stock may take the express elevator - or the stairs - to those price levels. My crystal ball is hazy on these things.
But I think the math of how we get there makes a lot of sense, and I expect the stock to work its way up to those price levels sooner or later.
At this point, analysts expect the company to earn $25 a share this year, and nearly $19 a share next year (a number that will likely be raised higher by analysts in coming weeks).
If we compute a typical price/earnings ratio - $392 divided by $25 - it tells us that Moderna's p/e number is 14.4.
That's still far too low.
Even a promising but un-profitable biotech on Wall Street typically gets a p/e ratio of 3o or 40 - a reflection of a company's rapid profit growth.
I think we're still in the drawn-out process of Wall Street "assigning" a new p/e ratio of somewhere around that level.
So if you do the math in reverse (40 x $25)...that's how I arrive at the $1,000 price target.
Best of goodBUYs!