Double Your Money with Our "High-Tech GPS"

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Early last year, I saw a research study that said nearly 60% of all U.S. workers have a net worth of less than $25,000.

And that means they have no retirement.

From the moment that I saw that research, I knew I had a mission - to help folks reclaim their financial futures by breaking free of Wall Street's self-serving shackles... and creating wealth all on their own.

And I knew there was one avenue to travel - the high-tech highway.

So I developed a roadmap - a set of five rules - that would serve as a kind of "tech-investing GPS." My goal was to help investors identify "double-your-money" tech stocks - and navigate their way to massive high-tech wealth.

Today I'm going to walk you through those rules again, and also give you a bonus - a biotech stock with double-your-money potential.

So let's get started ...

The Best of the Best Market

As all of you know, the best proxy for the broad tech market is probably the Nasdaq Composite Index. And the Nasdaq has been hot - red hot, in fact. On Monday of last week, this tech-laden index hit a 14-year high. And I believe there's more to come.

But there's a portion of the tech sector that's even hotter, still.

I'm talking about the biotech sector.

Over the last couple of weeks, a wide range of biotech shares have had strong runs. And I believe this sector will continue to outrun the market for the rest of the year.

And for a very simple reason: There's a major catalyst driving biotech and related drug company shares much higher.

Of course, I'm talking about mergers and acquisitions - or M&A in the parlance of Wall Street. Big Pharma and maturing biotech firms are using these mergers to acquire new products, broaden their sales channels, and supercharge profits.

Analysts at Bank of America Merrill Lynch (NYSE: BAC) see a strong biotech buyout market for 2014. That's going to be quite an accomplishment given that the $34 billion in deals the sector saw last year was larger than those in the previous two years combined.

Take the case of Irish drug maker Actavis PLC (NYSE: ACT). Just two weeks ago, it agreed to buy New York-based Forest Laboratories Inc. (NYSE: FRX) in a deal valued at $25 billion, sending shares of FRX up nearly 8% in just five trading days.

But this deal also underscores a very important trend for biotech investors: Both the target and the suitor often see their shares advance in price. In this case, Actavis gained 10% over the subsequent five days after the deal's announcement.

And we know of another company that's going to benefit from being a buyer.

We're Jazzed About This Biotech

For some time now, I've had my eye on Jazz Pharmaceuticals plc (Nasdaq: JAZZ), an Ireland-based mid-cap biotech that's been busy on the acquisitions circuit. It's buying promising drug compounds from peer companies. And it's buying rivals outright.

It's turned out to be an excellent strategy for Jazz.

On Dec. 20, Jazz agreed to pay about $1 billion to acquire Gentium SpA (Nasdaq: GENT), an Italian biotech firm. Gentium develops treatments for rare diseases, which is Jazz's main focus.

The deal helped round out Jazz's portfolio of highly specialized drugs and served as a catalyst that added significant shareholder value. Since the deal was announced, Jazz Pharmaceutical shares are up about 38%.

Gentium had only recently received European approval to sell its keynote drug Defitelio, a treatment for a condition in which the small veins in the liver become blocked, potentially leading to cirrhosis.

Jazz specializes in compounds designed to address unmet medical needs - which biotech insiders tend to refer to as "orphan diseases." The company has a strong expertise in treating narcolepsy, chronic pain, blood disease, cancer, and some psychiatric disorders.

In mid-January, Jazz agreed to acquire a late-stage drug candidate for the treatment of excessive daytime sleepiness from privately held Aerial Biopharma. Known as ADX-N05, the compound fits squarely in Jazz's sleep disorder portfolio,

On Jan. 26, Jazz reported somewhat mixed results for its financial fourth quarter. The company missed analysts' estimates for profits - but then forecast higher than expected results for the rest of the year. The shares were off about 7% for the day, but have since recouped some of that loss.

In my view, this created a super buying opportunity for Jazz Pharmaceuticals shares. While Jazz shares trade at just over $160 a share, I believe it can easily double from here.

Let me show you how by running it through the five "filters" that make up my tech-investing strategy. Let's take a look...

5 Signs Jazz Is Going to Double

Tech-Wealth Rule No. 1

Great companies have great operations: We look for excellent leaders who know how to build a top-notch franchise. Jazz co-founder and CEO Bruce Cozadd certainly understands how to do just that. He has a bachelor's of science degree from Yale University and an MBA from Stanford. Before creating Jazz, he spent a decade at ALZA Corp., a clinical-stage biotech firm. He served as chief financial officer and then as chief operating officer. Cozadd's 10-year stint at ALZA had a big payday for investors. Johnson & Johnson (NYSE: JNJ) bought the firm in 2001 in a stock deal worth $10.5 billion.

Tech-Wealth Rule No. 2

Separate the signal from the noise: To create real wealth, you have to ignore Wall Street's hype machine and focus on firms with excellent fundamentals. And Jazz certainly has a great foundation. The company has operating margins of 41% and a return on stockholders' equity (ROE) of 31%. The company grew its third-quarter profits by 127%, more than three times its sales growth. The market value of $10 billion isn't out of line.

Tech-Wealth Rule No. 3

Ride the unstoppable trends: You'll find that the best opportunities to achieve life-changing gains come from sectors that will remain red hot over the long term. Biotech promises decades of steadily expanding sales and profits. Here we find a combination of population growth and ever-longer lifespans contributing to increased demand that will likely continue through the end of this century. Also, U.S. and European regulators have shown a willingness to approve more "orphan drugs" designed to treat rare medical conditions, providing a boon to Jazz's core business strategy.

Tech-Wealth Rule No. 4

Focus on growth: Companies that have the strongest growth rates almost always offer the highest stock returns. Over the past three years, Jazz has grown its sales by a stunning 84%. Of course, the numbers vary on a quarterly basis, but for last year's third quarter, Jazz increased sales by 32%. More to the point, Jazz knows how to build a growth machine. As we noted earlier, the company saves on cash flow and improves profit margins by buying other growth companies and by acquiring high-margin drugs from other firms.

Tech-Wealth Rule No. 5

Target stocks that can double your money: This is where we look at Jazz's earnings growth and see how long it will take the firm to double profits. By doing that we can figure out how long on average it should take for the stock to roughly double in price. I've examined the firm's financials in detail and am projecting that earnings per share will grow at roughly 30% a year over the next five years. Now we use what I call my doubling calculator. Mathematicians call it the "Rule of 72." By dividing 72 by 30 we find that it should take about 2.4 years for profits - and the value of our investment - to double. Because I'm always conservative in my estimates, we'll add in a bit of a cushion due to the earnings miss. I still think this stock can double - in three years or less, which makes it one heck of a promising profit play.

Since JAZZ shares trade at roughly $160, some investors might find it hard to believe just based on the sticker price. So, consider that biotech leader Biogen Idec Inc. (Nasdaq: BIIB) trades at $347 a share - even though it has lower profit margins, a smaller return on stockholders' equity, and lower earnings growth.

Jazz has better financials than both Google Inc. (Nasdaq: GOOG), which trades at $1,200, and Apple Inc. (Nasdaq: AAPL), which sells for $525 a share. In other words, we have plenty of historical proof that pricey stocks still have the power to double in value.

Add it all up and with Jazz you have a stock that's the literal definition of "strategic growth."

The company's management team has repeatedly demonstrated its ability to create, or find and buy, growth. Jazz buys new drugs and other firms that fit its own long-term focus on high growth and fat profits. And it shows no signs of slowing down anytime soon.

That makes Jazz a double-your-money profit play that will help you achieve our main objective - to boost your net worth.

And once our "high-tech GPS" has helped you here... you can use it to your advantage - over and over again.

About the Author

Michael A. Robinson is one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.

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