Draghi’s Pain Can Be Your Gain with This $10 Stock

Keith Fitz-Gerald Jan 28, 2015
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Many investors expect “Super” Mario Draghi’s recently announced €1.2 trillion 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 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 bloc with a combined GDP that ranks only below America’s in terms of size 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 pummelled.

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, 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 $524 million and is almost entirely off the radar for most investors. And, while its P/E ratio of 36.5 might make it seem on the expensive side, 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 17.5, suggesting that now is a very opportune time to buy.

There’s nothing from the company’s last earnings report, released in October 2014, that dispels this view. Revenues increased 29% year-over-year, while cash flows from operations totaled $14.3 million for Q3 – a 135% increase year-over-year.

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 January 26, 2015. That’s a huge vote of confidence from seasoned analysts who have the power to move markets.

Source: Nasdaq.com

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 it 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 must likely to benefit. And that’s where the real money will be made.

Invest accordingly.

I’ll be back this Friday with more on EKSO Bionics.

Until then,

Keith Fitz-Gerald

8 Responses to Draghi’s Pain Can Be Your Gain with This $10 Stock

  1. Barend says:

    Good day Keith.

    Thank you for inviting me to follow you on facebook, however I do have one question that keeps me wondering very much, would be able to help me?

    Regards
    Bennie

  2. David Kurylo says:

    Good Morning Keith,
    Can you recommend an ETF on the TSX that should perform from ECB QE.
    Hard for us to buy on the NYSE with our beat up loonie!
    Thank you for all your insight.
    David

  3. Costas Tsintavis says:

    Yesterday I followed your lead on DHX based on fundamentals. Right now it is trading below your protecting stop of $8.55. I will stick to the big picture on a longer run but I would appreciate a comment.
    Thank you in advance for your time.
    Sincerely,
    Dr. C. Tsintavis

  4. RJ says:

    Keith,
    As usual, a good and forward-thinking article and practical trend analysis. Just one minor comment:. there are typos and misspelled words in articles that I read. If you have an editor, proof reader, or even a spell check, consider employing (no pun intended) them.
    Regards.

    • William Dahl says:

      Hi RJ,

      As the associate editor for Total Wealth, any typo you may find is my oversight. I’ve gone through the article and found the word you are referring to; it has since been corrected. Thank you for the sharp eyes, and also for being a part of the TW family!

      Best,

      -William Dahl, Associate Editor

  5. Ron T. says:

    You know it seems every time someone recommends a stock in an open forum like this, over the course of the next few day’s the stock drops like a rock… This time it certainly didn’t take long, the very next day the stock dropped off $1.76 at it’s intra-day low from the prior day’s close of $9.60 , closing the day at $8.80 with the highest volume in over 4 Months and heading even lower today???? Thoughts ?

    Curious Ron

  6. H. Craig Bradley says:

    FRAGILITY & PANIC OF ’17

    Correct me if I am wrong ( if possible ) but I think some U.S. BANKS are fragile and have just a couple of percent liquidity ratios. That means they don’t have the cash on hand to pay out if very many depositors demanded their money in person, same day. HSBC in fact was faced with one such depositor last year in England. I believe it was reported he wanted to make a $ 5,000 pound withdrawal ( of his own money). They told him that would not be immediately possible. He then scaled down his request into modest three figure numbers and was given some cash, eventually.

    If a number of people who had deposits at the same bank and specific branch and they decided to all go in the same business day and demand a tidy sum of cash individually, then we would probably find out the truth: The banks are broke and don’t have the cash on hand to take care of their customers if they want to make cash withdrawals. Therefore, you could engineer a “run” on your favorite bank and then watch the talking heads that evening on the news. Bank XYZ has just collapsed. It could happen.

  7. Juan says:

    Hi Mr. Keith I’m sorry I can not buy. I respect all off you but now I do not have Money. you know I’m not working and I’m recovery for my surgery.
    Thanks a lot my friend. God Bless all of you.
    Juan

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