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“I _ N _ _ R _ T _ _ N”
The 11-letter word that made me $127,344

Discover how it can now make you a fortune, too… with both dividends and jaw-dropping capital gains.

By Jim Pearce, Managing Editor of Smart Tech Investor and Chief Investment Strategist of Personal Finance

I’ve spent 31 years as a stockbroker, a financial planner and an investment advisor—but I have never met anyone with a better knack for picking a winning stock out of a crowd than the man I’m about to introduce you to.

His name is Leo Boeckl, and he worked for IBM for years as a competitive analyst. His strength is looking at an industry crowded with competitors and predicting the winners.

Over beers one day in 2008, he told me he had been studying the auto industry—then in real turmoil. Because it was the only major car company that had retooled and didn’t ask for bailout money from the Fed, he was convinced that Ford was going to be a survivor.

Ford stock was only $2 and change, so I loaded up on 10,000 shares. When I sold it for close to $15 just three years later, that paid for beers for the rest of my life, and a whole lot more.

A History of Smart Decisions

As director of Investing Daily’s Wealth Society, I’ve featured Leo’s advice to our members multiple times.

At our most recent meeting, I recommended Western Digital, which was Leo’s highest-rated tech stock. Listeners following my advice made a 31% gain in just 5 months.

This past January, Leo told our members not to buy Apple when it was at $525, saving investors a 35% loss when it bottomed out at $390 a few months later. At the same time he advised buying Apple at $400, which is now back at $520 for 30% gain.

I could go on and on… but I’ll let Leo explain his approach in the letter below (where he also gives away several of his top picks).

You’ll see that he credits his success to a single 11-letter word. He spells it out below… and once you grasp its power, this word can unlock a fortune for you.

Jim PearceJim Pearce
Jim Pearce
Managing Editor, Smart Tech Investor
Chief Investment Strategist, Personal Finance

P.S. Leo and I founded this service to bring his expertise directly to our members on a continual basis. I invite you to join today.


I still remember the moment it hit me…

It was May 2001. I was giving a press conference at the world’s biggest computer show—the CeBIT expo in Hanover, Germany.

This event is massive, with 850,000 attendees and 115 acres of exhibitions.

I was there to announce a joint go-to-market agreement between Electronic Data Services, Computer Associates and Motorola on new business enterprise mobility products.

As a global VP for EDS’ Applications Service Line, I had 30,000 people working under me, in offices from Mumbai to Detroit. I ran an $8 billion division that was responsible for 25% of the company’s entire revenue.

As the reporters swarmed around me, the event handlers from Computer Associates (CA) offered to heliport me from the roof of the building to the airport to catch my flight back home to Dulles Airport.

That’s when I realized that something was wrong with my colleagues’ priorities. I could have taken a cab, but instead they were spending big bucks on a helicopter ride that would save me all of 30 minutes.

They were more focused on PR than R&D. All the money spent on the first-class tickets, hotel suites and extravagant dinners would have been better invested in building out first-mover advantage for all three companies. The poor execution contributed to the downfall of both EDS and Motorola. It bothered me then and still bothers me to this day.

What’s more, it was clear that EDS had no clue about the crucial 11-letter word that every healthy tech company needs to know.

So I quit and went back to IBM, doing what I do best—competitive market research against our biggest rivals, including Microsoft, Intel and Hewlett-Packard.

In a nutshell, IBM paid me to look five years into the future and tell them which products were going to go down in flames… and which companies were going to cash in the most.

My job was to project the winners in each segment of the tech industry. To rate their chances of success, I had to identify the industry’s core disruptive technologies and judge how well the companies were integrating them within their new products and services.

You see, it is not just the first-mover advantage of innovation… it’s also the execution of the plan in delivering game-changing products that shape the marketplace—and our lives.

Being on the inside of this business is like watching a steel cage match. You wonder who will survive the blind-side shots, the dirty tricks and the war of attrition.

Most of the combatants doom themselves from the start by making a critical strategic error… like a chess player who makes one wrong move early in the game that he can never overcome.

Remember MySpace? In 2006, MySpace was the most-visited website in the United States, more popular than Google and Yahoo. Just a year earlier, NewsCorp bought the site for $580 million. Flash forward to 2011, and NewsCorp unloaded the struggling social media platform for $35 million.

MySpace Website VisitsMySpace didn’t pay enough attention to the 11-letter word I’m about to share with you. Nor did dozens of other now-defunct tech companies, from Compaq to MySpace to Nokia to BlackBerry.

Like the car business in the last century, we’re now seeing hundreds of bitter competitors consolidate into a handful of behemoths that will control 99% of all technology revenue.

A mega consolidation is now taking place in IT, just as it did in the auto industry decades ago. Fortunes were made investing in the Big Three. But you don’t hear as much about the 701 auto makers in the U.S. that went out of business in the past 100 years.

This phenomenon is spreading to other tech-centric industries, like media. Just five companies now control a majority of the media in the United States.

Number of corporationsPicking the winners in an industry of musical chairs is tricky. Just ask Microsoft CEO Steve Ballmer. In 2007 he went on the record saying, “There’s no chance that the iPhone is going to get any significant market share. No chance.”

Of course, exactly the opposite happened. Since 2007, Apple has sold 412 million iPhones, and its stock has jumped 525%.

I’ve made plenty of flubs myself. But I’ve made a good living for a long time by looking at a crowded field of competitors and zeroing in on the winners. I used to rely on my gut. But over time I evolved a model to mathematically determine which companies will survive and which will fail.

And it’s all thanks to the predictive power wrapped up in this 11-letter word…

I N N O G R A T I O N

Don’t look for this word in the dictionary. You won’t find it—because I made it up.

I needed a way to describe the magic that happens when a company combines “innovation” and “integration.”

Innogration is a concept that every investor needs to grasp because in today’s world, only companies that are both innovating AND integrating other companies’ breakthroughs into their own products are succeeding.

This is especially true in technology.

A good tech “innogrator” doesn’t just resell someone else’s invention. It combines its own internal capabilities with external resources to create a market-leading product.

The truth is, tech companies just can’t go it alone anymore.

For example, Apple rarely invents anything on its own. It operates more like Henry Ford. Ford didn’t invent the car or the assembly line. But he put the two together to knock car prices down so low that he transformed a luxury plaything for the rich into an affordable convenience for the masses.

Like Ford a century ago, IBM threw the industry into turmoil in 1981 by opening its proprietary architecture to suppliers and competitors as demand for home computers skyrocketed. With more programmers writing to IBM’s open personal computer standard, thousands of new programs were developed that became “killer apps” that turned the typewriter into a doorstop as the PC remade the world we live in.

IBM stock is up 2,481% since it took the bold move of opening up its software to programmers everywhere. (Meanwhile, I can tell you right now that PCs themselves will go the way of the typewriter within a couple years.)

IBM

More recently, in 2006, while other game makers were chasing the hyper-sharp realism preferred by hardcore gamers, Nintendo bucked the trend by focusing on simplicity. By incorporating motion sensors in its Wii gaming system, Nintendo captured a huge base of customers who had never thought of playing a video game before. A year later, its stock had tripled.

Nintendo

And Dish Network shook the airwaves when it gave customers the power to fast-forward through commercials. In the past three years, Dish stock has tripled, too.

DISH

Quite obviously, when a company disrupts a market, its stock price can catapult.

That’s because disruption and innovation go hand in hand. Companies that stop innovating cease to exist. BlackBerry is a perfect example.

I prefer companies like Amazon, that look at their business and think: Let’s eat our own lunch before someone else comes along and does it first.

Amazon started as a simple bookseller and blossomed into the worldwide merchant of everything under the sun… by continually disrupting and renewing its business model.

Amazon went public in 1997 at a split-adjusted $1.73 per share. It’s now trading for $366. Anyone who invested $10,000 when it went public is now sitting on $2,115,607.

Amazon

Get in the right tech stock and returns are legendary. But it’s not just the famous names like Amazon and Apple (up 4,530% in the past 10 years) or trendy “buzz” stocks like 3-D printing play 3D Systems (up 1,710%) that are making tech investors rich.

That why we’re looking for companies that know how to innograte—they have a history of exploding in value. When you spot a company that’s innograting, it’s like going back in time to 1986 and buying Microsoft before it went on to dominate its sector and turn $10,000 into $4,820,000.

In a minute I’ll tell you exactly how well some of the biggest names in tech are innograting right now… plus which ones I’d buy and which I’d avoid.

You’ll also see how to add a steady stream of stable, high-yielding tech plays to your portfolio every month.

All I ask you to keep in mind is that innogration is the key to everything I invest in.

Innogration is a remarkably accurate indicator telling you which tech stocks are likely to be bigger years from now and which will exist only in the memories of disappointed investors.

To determine if a company is innograting successfully, I look at three things:

  1. Is it returning enough earnings to investors in dividends to continue to attract investor capital…
  2. Can it grow cash flow fast enough to pay for the outside resources necessary to compete in the marketplace, and…
  3. Is it winning the battle for convergence?

The first two are straightforward. You can screen for companies with a decent dividend yield and strong cash flow with the click of a mouse. But finding a company that’s winning the battle for convergence is a tougher call.

Convergence is when two or more technologies come together in a single device. For example, the fax revolution was produced by a triple convergence of telecommunications, optical scanning and printing.

But faxing was just the tip of the iceberg. Now you can take pictures with a cell phone and surf the web on a television.

Even our homes are “converging.” Lighting, heating, air conditioning, security, fire detectors, appliances… are all converging into a single system, wirelessly networked and controllable from anywhere in the world—even from your smartphone.

Of course, the smartphone is the poster child for convergence. These tiny devices are becoming the remote controls of our lives, letting us do what we want when we want, whether it’s watching a movie, listening to music, buying a new pair of shoes or hundreds of other once-separate tasks.

Think about it. Where are the Palm Pilots, Motorola Flip Phones and the Creative Labs Nomad MP3 players from the 1990s? They were cutting edge just a few years ago. But now they have all been devoured by smartphones.

Smartphones even devour other smartphones.

In 2003, Motorola released the sleekest-looking new cell phone to date, called the Razr. By 2006, it had sold a whopping 130,000,000 Razrs. Motorola’s future looked bright to even the casual observer. A year later, the company was left in the dust by Apple’s iPhone and was then sold off for parts and disappeared.

Apple’s iPod sensation of 2001 has already been dwarfed by its own iPhone. Most people now carry only a smartphone for all music, email, calendar and web-surfing needs.

A few years ago, these were all separate devices. But now all of those activities are done digitally via electronic bits easily integrated into ever-smaller, increasingly faster and more powerful smartphones.

Even my GPS unit sits dormant in my glove compartment because my smartphone has replaced it, too.

The smartphone is the logical endpoint for personal computing. Anything smaller would be hard to manipulate with the human hand. So the next step is to figure out which other technologies will make the smartphone more useful.

Just as the computer on the Apollo 11 moon shot had less memory power than a dollar-store calculator does today… smartphones will become even more powerful than PCs over time.

In fact, smartphones are now so powerful, useful and versatile that they are becoming essential to our way of life. And that creates a special sort of investment opportunity that the world is just now becoming aware of…

Introducing the New Essential-Service “Utilities”

A few years ago, the idea of calling my teenage daughter’s iPhone an “essential service” was laughable. Now you can’t pry it from her fingers with a crowbar.

According to the International Energy Agency, 80% of the world has electricity… but 85% of the world’s people have access to cell phones.

Unlike old-school electric and water monopolies, the new “essential-service” stocks are built around handheld computing devices.

The handful of companies that end up controlling those markets will be pocketing monthly payments from billions of virtually addicted customers for decades to come.

Traditional “old-school” utilities sell things that people always need, like electricity and water.

Constant demand like that is a luxury that very few businesses enjoy. That’s a big reason utility stocks crush the market over the long haul.

For example, from 1968 to 2010, $10,000 invested in the average U.S. stock became $637,408. That looks pretty good at first, until you realize that $10,000 invested in utility stocks turned into a stunning $5,716,872. That’s NINE times the money average stocks made.

Just like old-school utilities that sell basic electricity, water and gas, the new “high-tech utilities” I track are remarkably recession-proof—if you know what to look for. (More on that in a minute.)

What’s more, these companies I recommend yield twice as much as the average stock—and their dividends are on track to double in the next five years.

These cash-generating machines will mail you ever-growing checks for the rest of your life. They not only pay generous dividends, they raise them constantly because their cash flow keeps rising. So your quarterly “paycheck” steadily rises, too.

Here’s the real kicker…

Unlike traditional utility stocks, which are heavily regulated, and whose rates are set by the government… these high-tech essential-service providers can charge as much as they want.

So you get the monopoly benefits of owning an essential-service stock—constant revenue from services people refuse to go without,high dividends, steady growth and almost no competitionwithout the negatives.

Many of these “tech utilities” are already returning cash to their shareholders, yielding 4%, 5% and higher.

Of course, if you want to profit from the huge cash flows these companies are generating, you need to know which ones will end up controlling their markets, and a fair price to pay for them.

If you don’t, you could end up paying way too much for a company that may not even be around in five years.

Here’s how to make sure that doesn’t happen…

How a Stock’s “Innogration” Score
Tells Me When to Buy It

You can get whiplash trying to follow a tech stock’s price.

Last September, Apple was trading above $700 per share, only to drop below $400 by the following March. $280 billion in market cap evaporated in just seven months.

At the same time, Facebook went public at a price of $38, only to quickly drop below $20. Just recently it rallied above $50. Facebook has gyrated from a market cap of $46 billion to $132 billion, all within the span of 16 months

Did that much at these companies really change that fast? Of course not.

So how do you determine a fair price to pay for a tech stock when everyone around you is behaving irrationally? Read on, because I’m going to tell you.

Conventional stock-valuation tools don’t work with tech stocks because it’s impossible to project earnings growth more than one year into the future in this fickle industry.

So over the years I have refined my process to where I can assign numerical values to the level of strategic convergence a company is achieving.

To make things easy, I call it the BiQ (pronounced “Bick”), for “Boeckl Innogration Quotient.”

I give a company separate scores for its dividend (0-3 points), its cash flow (0-3 points) and how well it is executing on its strategy (0-4 points). So the highest score a company can get is a 10, and the lowest is a 0.

Any company scoring over a 5 is likely to be a long-term winner. Any scoring less than 5 has low odds of survival.

As you can see, I give a lot of weight to dividends, which most tech-stock rating systems ignore. I think that’s a mistake, because companies that pay dividends are more likely to maintain a strong market cap in any market. And a strong market cap allows them to access credit markets and acquire the technologies that will make them dominant. Apple has a BiQ of 8.5 out of 10, a strong score. It has enough cash to pay a dividend, continue to innovate internally and pay for the external resources necessary to integrate those technologies with their own in order to create market-leading products.

Apple has done this for decades and is continuing to “innograte” in the post-Steve Jobs era. In the long run, that will overcome any short-term concerns about their product line.

But just because a company has a high BiQ score doesn’t mean you should buy it at any price. So I adjust every stock’s BiQ by a valuation factor to determine whether it’s a good buy at today’s price.

I could look at sales or book value, but I stick to earnings because tech stocks are the purest play on earnings on Wall Street. There isn’t much accounting gimmickry in tech stocks, so their earnings tend to be a reliable measure of their true condition.

I simply take the BiQ and multiply it by its relative P/E ratio to determine if a company is fairly valued versus its peers.

I use the forward 12-month earnings estimate (F12M) because it’s just about impossible to estimate earnings for tech companies more than 12 months out.

Any result 50% higher than the average score of 5 (i.e., 7.5 or higher) is a buy. Anything 50% lower (below 2.5) is a sell or even a short-sell opportunity.

Now let’s see what happens when we adjust Apple’s BiQ for its current market valuation. As we saw, Apple has a strong BiQ of 8.5, due to its high dividend, growth in cash flow and strategic direction. Even better, its F12M P/E ratio is only 12 versus an industry average of 14.

So if we multiply Apple’s BiQ (8.5) by its relative earnings multiple (14/12 = 1.14), its overall score is a 9.7. That’s 93% higher than the average score of 5.0, so it’s a buy.

Verizon has a high innogration score of 8 out of 10. It’s definitely a long-term winner. But its forward P/E of 18 is much higher than the industry average of 13, which reduces its overall score to 5.8. In other words, Verizon’s value is already reflected in the price of the stock, and its adjusted rating isn’t high enough to make it a “buy” right now. So even though Verizon scores almost as high as Apple on my BiQ scale, Apple is actually a better investment right now due to its higher adjusted BiQ.

Conversely, CA Inc. has a mediocre BiQ score of 5 out of 10, but since it’s more than twice as cheap as its peer group in terms of valuation, its net score is 11.9, almost twice Verizon’s. I think that Verizon will ultimately fare better than CA, but right now CA is a better investment. It’s the same story with disk drive maker Western Digital. Its BiQ score is only 6.5 out of 10, but its F12M of 8 is barely half its industry average of 14. That gives it a value-adjusted score of 11.4, twice Verizon’s score.

Microsoft only scores a 4.5/10 on my BiQ scale, but since it is trading at less than half the P/E of its peer group, its total score is 9.6, which makes it a good buy at current prices.

Free Report Gives You Buy/Sell Ratings on the
50 Most Popular Tech Stocks

If you’d like to get our call on the best tech stocks to buy right now, your timing is great.

To introduce investors like you to our unique new investing approach, we’re releasing a special report that explains “innogration” in detail, and reveals which companies have it and which ones don’t.

Hot Tech Stocks for Smart InvestorsHot Tech Stocks for Smart Investors ranks 50 of the most important tech stocks on the planet.

We don’t just give you the names of the companies. We give you a target buy rating, so you know when to pull the trigger and when to take a pass.

In a second I’ll show you how to get this report right now—for free. But first, I want to make sure you realize these aren’t fly-by-night longs shots. I’m talking about entrenched big-cap companies like Apple, Amazon, Oracle and Microsoft. These worldwide behemoths are throwing off tremendous amounts of cash and sending most of it back to their shareholders.

Our new 30-page report gives you the lowdown on 50 of the most popular tech stocks on the planet, including:

Microsoft (Nasdaq: MSFT)
Google (Nasdaq: GOOG)
Apple (Nasdaq: AAPL).
Intel (Nasdaq: INTC)
Advanced Micro Devices (NYSE: AMD)
Qualcomm (Nasdaq: QCOM)
Hewlett Packard (NYSE: HPQ)
Dell (Nasdaq: DELL)
Facebook (Nasdaq: FB).
Groupon (Nasdaq: GRPN)
LinkedIn (NYSE: LNKD) is
Amazon (Nasdaq: AMZN)
eBay (Nasdaq: EBAY)
Juniper Networks (NYSE: JNPR)
Cisco (NYSE: CSCO)
Seagate (Nasdaq: STX)
Western Digital (Nasdaq: WDC)
SanDisk (Nasdaq: SNDK)

Hot Tech Stocks for Smart Investors sells on Amazon for $47.95. But you can get it FREE with a subscription to Smart Tech Investor—the service that brings you a continual stream of companies developing innovations that are transforming transportation, medicine, energy and national defense.

I’ll explain everything Smart Tech Investor gives you in a second.

I see some big profits for anyone who joins me today in buying the tech giants of tomorrow. The best thing is, we don’t have to take big risks to get there. At today’s prices, we can be cowards, not cowboys.

There’s nothing daring in buying Juniper Networks at $20 a share, for example. Buying the stock at its bubble peak of $229—which was 48 times earnings, 123 times book value and 157 times sales—is what took guts.

At $20 a share, the stock is trading less than four times book value. And it has $3 per share of cash in the bank, so you’re really paying only $17 per share for the business.

Juniper might not hit $229 again in our lifetime, but so what? The company is now selling for about half of what its assets would sell for separately. At this level, investors are on track for very happy returns.

Same story with Cisco. It was crazy to buy it at its peak of $82, when its P/E was 223, its price-to-sales ratio was 42 and its price-to-book was 33. Now at $23.40 and with a price-to-book of 2.1, it’s a whole different story. What’s more, it has an astounding $9.44 of cash per share sitting in the bank. So you’re really only paying $14 per share for the business.

Important: Please don’t rush out and buy Juniper or Cisco until you get your copy of Hot Tech Stocks for Smart Investors. I update my data every week to give readers the current best buys and sells at any given moment… so they might be edged out by even-better bargains by then.

I am sending a free copy of this special report, which normally sells for $47.95, to new subscribers of Smart Tech Investor.

Please move quickly, because this report will only be available for a limited amount of time.

What You’ll Get from Smart Tech Investor
If You Join Us Now

  • A new issue of Smart Tech Investor every month, including unlimited access to my extensive research. This guarantees you a steady stream of R&D-heavy companies that are building better mousetraps—from social networks to self-driving cars—and profoundly changing our lives. In every issue, we highlight a particular stock and sector—giving you detailed explanations of the actual technology and its business model.
  • At the core of Smart Tech Investor is our Smart Tech Rating System that combines a company’s innogration score (BiQ) with its current valuation. The BiQ determines which tech companies are likely to survive and dominate the ongoing consolidation in the tech sector. And our Rating System determines when these stocks are good buys.
  • Our recommended portfolio. This is the guts of our entire service—where we release our actual picks for our paying clients. We have 10 picks in our portfolio now, and you might be surprised at how much some of them yield. You actually get three portfolios:
     
    • Smart Tech 50—Here’s where I rate the 50 most important tech securities on the planet based on their BiQ score. This comprehensive rating table gives you the stock’s dividend yield and earnings history, plus my proprietary rating for their strategic plans to innograte in the future.
    •  
    • Investment Portfolio—From the SmartTech 50, I cull the herd down to the handful of winners that you should own at any given time based on their value-adjusted Smart Tech Rating. Technology now makes up 17% of the S&P. To have a diversified, market-beating portfolio, it’s imperative that you own some, too.
    •  
    • Trading Portfolio—A list of short-term trading opportunities, both long and short, triggered by unusual market conditions. Trades like this are key in a market that could be going sideways for the next year or two while the Fed is tapering. The tech sector will be one of the few places where you can bang out double-digit returns—even if the overall market goes nowhere.
  • Smart Tech 50 Weekly Movers. This weekly bulletin updates you on news in the tech sector, plus any changes to the Ratings System that week. You’ll get the premium version (which includes specific buy-sell advice) free as a Smart Tech Investor member.
  • Flash alerts. We’ll email you instantly whenever a market or industry event affects our investments, and pass along our action plan.
  • Complete archives. Every article ever published in Smart Tech Investor, available instantly.
  • Personal access. When you have a question on anything in Smart Tech Investor, just ask me in our members-only forum, and I will answer every question promptly.

Try This Unique Service Now at the
Lowest Price We’ll Ever Offer

Smart Tech Investor is a web-based newsletter that you can access the instant we release each monthly issue. You can then easily print out the issue from your computer if you wish.

You’ll never have to wait for your issue by snail mail because as soon as we dot the last “i”, we’ll email you a link that takes you straight to the complete issue on our subscribers-only website. It’s even formatted for easy reading on your smartphone, if you like!

We’re currently offering an entire year of Smart Tech Investor for just $297.

Here’s what makes our offer unusual…

You have three full months to decide if you like our research.

If you don’t, no problem. Simply call or email us and we’ll send you a 100% refund—even if you call on the 90th day of your subscription. You can keep the free report I’m about to send you, free of charge.

In other words, you can’t lose a penny… and I think you’ll be impressed at the remarkable amount of research you receive.

Send for our current recommendations now. You won’t find this information anywhere else.

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Welcome aboard,

Leo Boeckl
Smart Tech Investor

P.S. Remember, you are only agreeing to try our research to see if you like it. If you decide that Smart Tech Investor isn’t for you, we’ll return every penny. Just let us know in the first three months. The free report and all issues are yours to keep, with our thanks. To get your free report and get started with Smart Tech Investor, please click the button above.

We’ll send you our breakthrough report free, while you examine Smart Tech Investor on a trial basis—at our risk.