Many investors expect "Super" Mario Draghi's recently announced 1.2 trillion euro stimulus program to produce big market gains just like the Fed's QE did here in the United States.
What they're missing is that not all companies are going to benefit. In fact, the vast majority won't.
How do you know if the one you want to buy is one of 'em?
...because it's tied into one or more of the six unstoppable trends we're following.
That's what we're going to talk about today.
A 1.2-Trillion-Euro Windfall Powered by Scarcity & Allocation
Mention the words "allocation" and "scarcity" to most investors and they immediately default to looming shortages of water, minerals, or even food.
In reality, though, there's another twist - a shortage of people.
Let me set the stage.
No doubt the situation in Europe looks very familiar.
You've got a ginormous 19-member economic block with a combined GDP that ranks only below America's in terms of size and that's failed miserably to restart itself on the heels of the Financial Crisis.
So, like many other nations around the world, its central banking body - the ECB - has turned to massive bond-buying (quantitative easing) to drive interest rates near zero in a desperate attempt to get consumers to spend rather than save.
With 15% unemployment in the Eurozone and growth middling at 1%, Draghi's clearly under enormous pressure to do something. Unfortunately, he's chosen an option that in the end run is far worse than doing nothing, just like Fed Chair Yellen and Bernanke before her.
In the past, I've recommended readers of the Money Map Report take advantage of the Fed's stimulus while simultaneously insulating their portfolios from the inevitable blowback by investing in what I call "must haves." I still do today for one simple reason - they're the companies humanity simply can't do without. That gives them tremendous staying power even if market conditions grow rougher and even as "nice to have" stocks get pummeled.
My point is that you can have your cake - and invest in it, too...
This Company Is Perfectly Positioned to Profit from Zero-Interest Chaos
Draghi's actions sound great on the surface and in the mahogany-lined halls of power but, in reality, they will produce a long list of losers. Anyone with savings, which is pretty much the entire middle class, will be forced to find another way to put their money to work or have their bank accounts diminish thanks to negative interest rate and yet more downward pressure on the euro. So retail investments are out.
The big banks are floundering in debt and Draghi's program is like rewarding an alcoholic who's trying to quit with another drink. Most would actually fail any kind of real stress test as opposed to the watered-down ones now in place. That means big banks aren't where you want to be either.
And what is?
Try medicine, technology, energy, and defense. Those are all "must have" companies that Europe literally cannot live without. Draghi's monetary madness will boost them significantly.
Only there's one problem - a chronic shortage of highly trained, highly skilled people needed to make that happen.
Enter Dice Holdings Inc. (NYSE: DHX).
DHX is a New York-based staffing company that provides professional-grade hiring events and designs career websites for companies in both North America and Europe. It specializes in industries like energy, healthcare, defense tech, and finance - all of which you may recall are tapped into our six unstoppable trends.
It has a small market capitalization at $457 million and is almost entirely off the radar for most investors. And, while its P/E ratio of 31.6 is about average, I'm more interested in its forward P/E ratio, which is a much more reliable indication of where a company is going. Dice's forward P/E ratio stands at 17.92, suggesting that now is a very opportune time to buy.
There's nothing from the company's last earnings report, released in January 2015, that dispels this view. Revenue increased 16% year over year, while cash flows from operations totaled $55.5 million for the year in 2014 - a 12.3% increase year over year. Markets overreacted to the news of DHX's earnings per share missing forecasts by $0.01/share, sending the stock down as much as 12%. I see this as a great buying opportunity.
The company, which collects fees for professional hiring services from a broad array of clients, is finding more success in convincing clients to adopt its practices and solutions. The improved numbers in its last earnings report were partly due to the success of Open Web, a site created by DHX to combine publicly available information from more than 130 professional and social networks to build more efficient paths to find and connect with ideal job candidates.
The company also boasts high levels of institutional ownership, at more than 85% as of Jan. 26, 2015. That's a huge vote of confidence from seasoned analysts who have the power to move markets.
When I first recommended DHX to Money Map Report subscribers in October 2014, institutional ownership was as high as 97% - proof positive to me that I had found a gem under the radar that smart money was already betting on. Since then, Dice Holdings has jumped by 18.71%, and it's natural that institutional ownership would drop slightly as more regular investors climbed on board.
There's no question Draghi's between a rock and a hard place, just like Yellen is here in the United States. But that doesn't mean it's the end of the financial universe as critics would have you believe.
In fact, quite the opposite is true. The re-allocation of capital courtesy of Draghi leads directly to the most valuable "must have" of all - the people who are going to staff up the sectors most likely to benefit. And that's where the real money will be made.
Investors: DHX will have a great run as stimulus continues... But Keith's also found a stock that can explode regardless of what governments and central bankers do. It's got an "Unstoppable Trend" behind it, and it doubled within six weeks of him recommending it to Total Wealth readers. For a full report, including the ticker symbol, sign up for Total Wealth here - it's completely free!
About the Author
Keith is a seasoned market analyst and professional trader with more than 37 years of global experience. He is one of very few experts to correctly see both the dot.bomb crisis and the ongoing financial crisis coming ahead of time - and one of even fewer to help millions of investors around the world successfully navigate them both. Forbes hailed him as a "Market Visionary." He is a regular on FOX Business News and Yahoo! Finance, and his observations have been featured in Bloomberg, The Wall Street Journal, WIRED, and MarketWatch. Keith previously led The Money Map Report, Money Map's flagship newsletter, as Chief Investment Strategist, from 20007 to 2020. Keith holds a BS in management and finance from Skidmore College and an MS in international finance (with a focus on Japanese business science) from Chaminade University. He regularly travels the world in search of investment opportunities others don't yet see or understand.