[Day 4/5] The biggest key (by far) to profiting from disruptors

90 seconds.

That’s roughly how long it takes me to judge a stock.

Within 90 seconds, I know if a stock has real potential to hand us profits of 100%, 200%, or better...

Or whether it’s a dud to be tossed aside.

Maybe you’re thinking, “Stephen, there’s no bloody way you can learn all there is to know about a business in less time than it takes to brew coffee.”

And you’d be right… 90 seconds is only enough time to learn one thing about a stock.

Fortunately, there’s only one thing I need to know to decide if it’s potentially worthy of “disruptor” status.

Is this company doing something radically different than its competitors?

Is it breaking the rules? Is it changing the game?

I can tell you 49 in 50 fail this test right out of the gate.

Believe it or not, many CEOs are happy with the status quo. They don’t push hard for their companies to innovate. They’re satisfied to sell the same old stuff in the same old ways, collect a big paycheck, and go home at 5 pm.

I’m not interested in these stocks. It’s only a matter of time until they’re disrupted.

When I tell folks I specialize in disruption research, they often reply, “Oh, so you’re a tech analyst.”

Not exactly. Technology is an important driver of disruption. But the real crux of disruption—the real source of its moneymaking power—is change.

For example, Southwest Airlines (LUV) is by no means a tech company. Yet it changed flying forever when it pioneered discount air travel.

By charging far less for airfare, it forced the whole industry to rethink the way it’d been doing business for decades. From 1980 to 1999 the stock handed investors 8,910% gains.

Starbucks (SBUX) is no tech company either. But it changed America’s relationship with coffee.

Instead of serving cheap stuff that any old gas station could brew, it convinced customers to pay $6+ for premium caffeinated drinks. Although it spawned a dozen competitors, Starbucks managed to hand investors 9,050% gains from 1992 to 2012.

Here’s a more recent example.

My readers know all about Alteryx (AYX). It’s a disruptor that’s changing the way companies use data. In short, it’s helping America’s largest companies leverage data to make more money.

Alteryx soared 88% in the five months after I first wrote about it:

My readers also know The Trade Desk (TTD). It’s one of the first disruptor stocks I recommended publicly.

The Trade Desk is changing the way companies buy online ads. Since I wrote about it, it’s soared 150% (although I recommended selling it in February to lock in a 115% profit.)

Here’s one more.

Back in December I told my readers about Xilinx (XLNX), a maker of 5G computer chips. Lots of companies are seizing the opportunity to make parts for the coming superfast cell network known as 5G. But Xilinx is changing the game with special customizable chips that are ideal for the 5G buildout.

Xilinx has leapt to a 35% gain:

As I mentioned, only about 1 in 50 stocks is even worthy of deep research. My team and I sort through dozens of duds to find a winning disruptor.

But as you can see, the profits are worth it. Disruptor stocks that truly change the game are in a class of their own.

That’s all for today. Tomorrow we’ll conclude this series with my most important essay yet.

In it, I’ll announce what I’m convinced is my next big score.

It’s a disruptor stock that’s quietly changing how the whole internet works.

To disruptors changing the world,

Stephen McBride
Chief Analyst, RiskHedge

PS: One disruptor stock can hand you big gains. Can you imagine the profits you’d stand to collect if you owned a whole portfolio of them? More tomorrow.