Start the conversation
I'm not a mathematician on the level of Jim Simons and the rocket scientists at Renaissance Technologies - most of us aren't. But you don't need to be to make huge profits.
All you need is a few simple rules and 20 minutes a month.
That can help you outperform Wall Street by an average of 542%.
This is a very straightforward system that could easily make you rich - if you have the discipline to stick with it and the confidence to go against the crowd.
Once you know how to find the target stocks - the "Low-Priced Five," which I'll show you today - you repeat the process every four weeks.
The returns are jaw-dropping. Following these rules has turned $10,000 into $247,400 over the last 20 years. That same 10 grand in the pundit-suggested index fund would have grown to just $38,500.
[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]
Five Low-Priced Stocks for a Profitable 2020
The rules here are simple.
Our universe is limited to just those stocks in the S&P 500.
We will only consider those that are profitable over the next 12 months.
With the economy bubbling along for over a decade, most of these large-cap companies qualify, as 488 of them have a positive bottom line.
Now, we're just going to buy the five lowest-priced stocks on the list.
We will repeat this exercise every four weeks, selling those that are no longer on the list and purchasing the new low-priced stocks.
Like I mentioned - these rules could've turned $10,000 into $247,400 over the last 20 years.
Making nearly 6.5 times the index takes about 20 minutes a month.
Now, it can be a bumpy ride.
You do have some big down months along the journey, but a huge recovery rally has pretty much always followed them. You would have made money in 2008 and earned huge profits in the collapse of the Internet bubble.
If you hit a losing streak, that's where the discipline comes into play.
At times, you will own stocks that seem to make little to no economic sense at all. They will be underperformers that have had negative headlines in the weeks and months before you bought them.
In fact, your friends and associates will think you've lost your mind when you tell them what you own. However, if you have the discipline to stick to it, the simple concept of mean reversion will make you more money than you ever thought possible.
Here's another way to look at it...
You all know I like baseball.
I wouldn't call this system a home-run hitter. Rather than being an all-star "Babe Ruth" approach, it's more a dependable "Rod Carew" method of investing - with lots of singles and doubles and the occasional long ball mixed in from time to time.
This approach to investing involves hitting for average stocks with lots of modest one-month gains - that pile up significantly over time.
It isn't flashy, but there's more than one path to the Hall of Fame.
Following this simple strategy should help make 2020 one of your most profitable years as an investor.
With that in mind, here are the starting Low-Priced Five to ease you into 2020...
Low-Priced Stock No. 1: There's a Ford in Your Future
Ford Motor Co. (NYSE: F) isn't exactly the sexiest stock pick in a world where high technology stocks get all the love - but don't ignore it.
Car sales have remained steady for Ford. Sales through the end of the third quarter were down 4.9% in the United States and up 3% in Europe. Operating cash flow was up about 8% for the first nine months of the year.
Behind the scenes, Ford is moving forward on electric vehicles and driverless car programs.
In fact, Ford recently announced that some versions of its new electric Mustang, the Mach-E, have sold out.
The stock's been in our portfolio for a while now, and as long as we own it, we'll collect a 6.4% dividend yield.
Low-Priced Stock No. 2: Extracting Value
Freeport-McMoRan Inc. (NYSE: FCX) is the largest copper miner in the world and also mines for gold, molybdenum, silver, and other metals, as well as oil and gas.
None of these has been a fantastic business over the last couple of years, seeing as how commodities have underperformed. But we're looking ahead, not behind.
The company should benefit next year from rising copper prices as we see increased demand from homebuilding and electric vehicles.
Low-Priced Stock No. 3: IMO 2020 Changes Everything
Marathon Oil Corp. (NYSE: MRO) has completely reworked its asset mix over the past few years, selling traditional oil and gas assets and reinvesting the cash in shale fields and other unconventional oil and gas projects.
It is now a dominant player in the Eagle Ford Shale field in Texas and Bakken Field in North Dakota.
Crude oil has been moving higher, and we could see more upward pressure for the changing shipping rules implemented by the International Maritime Organization (IMO).
Low-Priced Stock No. 4: a Familiar Face
Hanesbrands Inc. (NYSE: HBI) is a stock I mentioned not long ago because it's cheap, and the company's using free cash flow to pay dividends, pay down debt, and buy back stock.
Its primary business is underwear and sporting apparel. That might not be as exciting as the latest tech gizmo or healthcare breakthrough, but it does generate free cash flow that management has been using to reward shareholders.
While we own it, we'll have a nice 4.1% dividend yield for a great start to the new year.
Low-Priced Stock No. 5: Have I Mentioned I Love Banks?
Huntington Bancshares Inc. (NASDAQ: HBAN) is a regional bank with operations in Ohio, Michigan, Pennsylvania, Indiana, Illinois, Wisconsin, West Virginia, and Kentucky.
As with the other members of the Low-Priced Five, there's nothing glamourous about the company. But you don't need glamour to make money. Huntington is just a very well-run bank with excellent profits.
The bank has also been using that cash flow to pay dividends and buy back stock.
It's hard to tell how long we'll own the stock, but while we do, we'll collect a 3.97% yield.
California's Solar Mandate Could Mean $153 Billion for "Dark Burst" Investors
On Dec. 31, a new government mandate was enshrined into law - and with it, the need for a technology only held by this tiny company.
It holds a virtual monopoly on the groundbreaking "Dark Burst" technology at the heart of the massive $153 billion opportunity.
This is your head start to pick up as many tiny shares as you'd like of this company - one that could see a 10,285% sales surge in the new year. Click here to learn more.
About the Author
Tim Melvin is an unlikely investment expert by any measure. Raised in the "projects" of Baltimore by a single mother, he never attended college and started out as a door-to-door vacuum salesman. But he knew the real money was in the stock market, so he set sights on investing - and by sheer force of determination, he eventually became a financial advisor to millionaires. Today, after 30 years of managing money for some of the wealthiest people in the world, he draws on his experience to help investors find "unreasonably good" bargain stocks, multiply profits, and build their nest eggs. Tim tirelessly works to find overlooked "hidden gems" in the stock market, drawing on the research of legendary investors like Benjamin Graham, Walter Schloss, and Marty Whitman. He has written and lectured extensively on the markets, with work appearing on Benzinga, Real Money, Daily Speculations, and more. He has published several books in the "Little Book of" Investment Series and a "Junior Chamber Course" geared towards young adults that teaches Graham's principles and techniques to a new generation of investors. Today, he serves as the Special Situations Strategist at Money Morning and the editor of Peak Yield Investor.