From Jeff Brown, editor, Exponential Tech Investor: One of the most successful companies to go public in the last 30 years is Amgen.
In fact, from 1984 to today, Amgen has shot up a staggering 166,980%—going from 10 cents per share to around $167.
Had you invested a mere $600 in Amgen back then, you’d be a millionaire today.
This is the exact type of company I look for when I’m searching for hypergrowth stocks.
If you want to make technology stocks part of your portfolio, here are the three indicators you should look for…
Indicator No. 1: Exponential Technology
When I analyze technology startups, the first thing I want to know is whether the company is using leading-edge technology, what I call “exponential technology,” in its product or service.
What is exponential technology?
Simply put: It is technology that increases rapidly every year instead of a slow, linear climb.
Consider computers. The speed of our computers’ processing power has essentially been DOUBLING over the last 45 years.
This process of consistently doubling is exponential technology. And it’s happening in various sectors today like medicine, robotics, artificial intelligence, and information technology.
My advice: If the tech company you’re looking at is not using breakthrough technology that’s improving by leaps and bounds each year, move on.
Indicator No. 2: Momentum
Once you’ve determined the company is using exponential technology as part of its product or service… the next thing you want to know is:
Is the industry it’s delivering this product or service to growing? More specifically, is this industry growing exponentially?
Here, consider Amgen, the company I mentioned at the start. Over a period of five years in the mid-90s, the industry as a whole was growing at a click of almost 40% per year.
Its industry was doubling about every two years. The market size, and thus the opportunity for Amgen, was growing exponentially.
Indicator No. 3: The “disruptor”
And the third thing I look for is what I like to call the “disruptor” indicator.
In other words, you want to know if the tech company you’re considering is disrupting an existing industry… or if it’s disrupting old industries in a way that’s actually creating a completely new industry.
The classic example, is the advent of the car. Almost overnight, the “horse and buggy” industry was wiped out thanks to the Ford Model T.
Today, we have several “legacy” type businesses and companies that are facing serious (and potentially terminal) competition.
IBM, FedEx, and Western Union all come to mind.
Companies that offer such compelling products or services that offer benefits that are significantly greater than what is available to consumers today are disruptors. Those companies are almost always delivering something better, faster, and cheaper than consumers or corporations have ever seen before.
“Is there anything else I should look for?”
Now, of course, there are other things that come to play. For instance:
Does the company have strong intellectual property, or patents—an example of what Warren Buffett called an “economic moat”?
Who else is investing in the company? (Especially pertinent when looking at early-stage companies.)
BUT if you stick to the three main indicators: exponential technology—is the product using exponential technology to grow? Momentum—is the industry itself growing rapidly? And the “disruptor”—is the company about to displace existing “legacy” type companies? Then, you will be way ahead of 99% of investors out there.
It’s a fairly straightforward formula. And one I think will benefit the tech holdings in any portfolio moving forward.
Reeves’ Note: Jeff has found a small company that checks “all the three boxes” (and many others) he mentioned above. Scientific studies indicate its new technology could play a major role in eradicating virtually all diseases worldwide.
The company could make its initial public offering (IPO) on the NASDAQ this Tuesday, October 18. And Jeff’s put together a free presentation showing how you can get in on the opportunity this new IPO presents.
If you want to learn more about this urgent opportunity, you can find all the details here.