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Weekend Edition

Investors are making a fortune off this long-term megatrend...
Saturday, November 22, 2014

The Weekend Edition is pulled from the daily Stansberry Digest. The Digest comes free with a subscription to any of our premium products.
 The health care boom has made a fortune for many Stansberry Research subscribers...
For years, we've recommended loading your portfolio with some of the highest-quality names in health care. The thesis was simple: As Baby Boomers near retirement, they will require more health care. Over the next 20 to 30 years, the older segment of our population will explode. And aging Baby Boomers will spend a fortune on everything from nursing homes to pharmaceuticals and life-saving devices.
Dr. David "Doc" Eifrig's Retirement Millionaire subscribers are sitting on several big winners from the health care boom. As he wrote in May 2011...
Older people use three to four times the amount of prescription drugs as folks under 50. And more than 30 million people will gain Medicare coverage by 2014. This means an increasing number of written prescriptions.

 In addition to the demographic trend, Doc also expected the government to spend more money on health care...
Right now, only 10% of Medicare dollars are spent on pharmaceuticals. If Washington starts looking for cost-effective ways to manage health, prescription drugs will be a quick and easy way to test its hypothesis. In many cases, the use of drugs can ward off diseases for many years. For example, doctors already know blood-pressure pills and diabetes medications prolong lives cheaply.

 Retirement Millionaire is sitting on five triple-digit winners in the health care sector, including pharmacy chain CVS Health and Big Pharma firm Eli Lilly.
Another one of his health care picks – medical-device maker Medtronic – hit an all-time high this week. Doc recommended shares in February 2011, in part because the company is on the cutting-edge of devices to treat heart and brain diseases – both huge problems for the elderly. As Doc explained in that issue...
Medtronic is synonymous with health care technology. The company's main business is pacemakers. For generations, Medtronic has been a leader in using electronics to stabilize and manage heart rhythms and maintain lives. It was one of the first to create an implantable pacemaker that could withstand the giant magnets of an MRI machine.
But the company has grown and diversified. In 2010, the Cardiac Rhythm division represented only 33% of the total revenue of the company ($15.8 billion).
Today, Medtronic gets about 20% of its revenues from cardiovascular devices (e.g., heart valves) and 20% from spinal products (it's a leader in scoliosis management). The rest comes from its neuromodulation – regulating the nervous system – (10%), diabetes (8%), and surgical technologies.
Medtronic has grown steadily, even during tough economic times. Sales have grown about 8% in each of the past three years, a difficult feat for any business.
But what makes Medtronic special is its dividend. The company has paid shareholders for 36 years and increased its dividend for 33 consecutive years. A company that keeps growing by producing cutting-edge technologies and rewarding shareholders is the kind of company we love to own at Retirement Millionaire.

 Doc paid 10 times earnings for Medtronic, about half the valuation of the average S&P 500 company at the time.
On Tuesday, Medtronic reiterated its intention to buy Covidien for $42 billion. Covidien makes simple but essential medical supplies like bandages and staples.
The merger will make Medtronic "one of the most powerful companies in health care," Doc said last week.
 And the good news continues for Medtronic... According to a recent report from investment bank JPMorgan, Medtronic could increase its dividend by 50%. Medtronic currently yields 1.7%, versus 2.8% for competitor Johnson & Johnson. But its deal with Covidien may help close that gap. From Barron's...
Dividend fans may be especially pleased. Medtronic has increased its payments annually for 37 straight years, most recently in June, by 9%. But the company's policy of returning half of free cash flow to shareholders has lately looked unsustainable, because only 35% to 40% of free cash flow was being generated at home. The new company will be able to tap up to 60% to 65% of its free cash flow, and that figure will rise over time.
"Post-closing of Covidien, Medtronic could increase its dividend by 40% to 50% (to $1.70-$1.80 a share) and still have more than $2 billion of free cash flow available for buybacks and U.S. acquisitions, plus another $2.6 billion unavailable, but being generated outside the U.S.," wrote JPMorgan analyst Michael Weinstein on Thursday. Medtronic says it hopes to close the deal late this calendar year or early next year. Weinstein lists Medtronic as a top pick.

Retirement Millionaire subscribers were up 92% on Medtronic as of yesterday's close.
 And Wednesday, another company in the Retirement Millionaire portfolio hit an all-time high: retail giant Target.
Target just announced a fantastic quarter, sending shares up 7.3%. (Target's earnings came in after its largest competitor, Wal-Mart, recently reported a blockbuster quarter.)
 Doc recommended Target shares in February when the company was embroiled in a data-breach scandal. Hackers stole the credit-card and personal information of more than 100 million customers. It was the largest retail hack in U.S. history.
As a result, shares fell 23% in six months. In these cases, you have to ask yourself... Is Target's business worth 23% less in six months because sophisticated hackers broke into its files? Of course not. Doc understood Target would continue to produce big retail profits long after the drama passed.
 The earnings report proved Doc's thesis was correct... Third-quarter revenue rose to $17.7 billion, up 3% from $17.3 billion in the same period of 2013.
Target's $0.55 in earnings per share (EPS) bested analyst expectations of $0.40-$0.50 for the quarter. The company expects fourth-quarter EPS between $1.13 and $1.23 and anticipates EPS of $3.15-$3.25 for 2014.
Same-store sales – an important retail metric – rose 1.2%. Online sales jumped 30%. In the November 11 Digest, we detailed Target's efforts to compete in digital sales... including offering free shipping on online orders until December 20.
Chairman and CEO Brian Cornell said Target is "encouraged by the improving trend we've seen in our U.S. business throughout the year."
As we all know, good results mean the company can pass more money along to shareholders. Target paid $330 million in dividends in the third quarter, a 21% increase from the same period last year. The company also recently hiked its quarterly dividend from $0.43 to $0.52 per share... a 21% rise.
Since February, Retirement Millionaire subscribers are up 28% on Target.
 If you aren't already a Retirement Millionaire subscriber, now is the perfect time to test the waters... In his latest issue, Doc reviewed his entire portfolio... explained why the next two years will be a great opportunity to build wealth... and told readers exactly which stocks you should buy today. These are high-quality businesses that pay solid dividends – including one blue-chip firm paying a 5%-plus dividend today.
You can sign up for Retirement Millionaire for only $39... And if you decide it's not for you, we offer a 100% money-back refund. Learn more here.
Sean Goldsmith

This Week's Winners
S&P 500 Symbol Change
Macerich REIT MAC +11.9%
Phillips 66 PSX +9.9%
Baker-Hughes BHI +9.6%

Countries Symbol Change
Turkey TKF +4.0%
Indonesia IF +3.8%
Brazil EWZ +3.7%

Sectors Symbol Change
Gold Mining GDX +9.9%
Homebuilding ITB +2.4%
Semiconductors PSI +2.1%

Commodities Change
Wheat +6.4%
Lean Hogs +4.1%
Corn +4.0%
Date Range:11/13/2014 to 11/20/2014
From The Crux
This Week's Losers
S&P 500 Symbol Change
Cliffs Natural Resources CLF -15.4%
Denbury Rresources DNR -10.6%
Halliburton HAL -8.5%

Countries Symbol Change
Australia EWA -3.2%
China FXI -3.0%
Hong Kong EWH -2.8%

Sectors Symbol Change
Gambling BJK -1.7%
Software IGV -1.1%
Telecom IYZ -0.9%

Commodities Change
Natural Gas -9.7%
Brent Crude -6.0%
Cotton -5.5%
Date Range:11/13/2014 to 11/20/2014
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