Up 32% This Year, This Health Stock Is Set To Really Take Off

[John Thomas]

This is my 14th consecutive closing Trade Alert, and the 20th including my remaining profitable open positions. I have only six more to go until a break my previous record of 25. It doesn?t get any better than this.

The yen is now in free fall, and the Japanese stock market is going ballistic, as I expected. Both the ProShares Ultra Short Yen double short ETF (YCS) and the Wisdom Tree Japan Hedged Equity ETF (DXJ) have pierced new five-month highs, and loftier levels beckon.

The immediate trigger was a meeting at the Bank of Japan, where the governors voted to maintain their ultra low, 0.1% discount rate. They also reiterated their commitment to growing the money supply by a blistering $600-$700 billion a year, or nearly triple the US monetary easing rate on a per capita GDP basis.

On the same day, we received month old Fed minutes showing a definite lean towards tapering our own quantitative easing. When this eventually does happen, the interest rate differential for dollar/ yen will rise dramatically. Needless to say, this is all terrible news for Japan?s beleaguered currency, as interest rate differentials are the primary drivers of foreign exchange markets.

Given all this, I am going to take profits on my existing short position in the yen through the Currency Shares Japanese Yen Trust (FXY) December, 2013 $101-$104 in-the-money bear put spread. At this mornings shockingly high prices for the spread, we can harvest 83% of the potential profit with one full month still to run to the December 20 expiration.

The outlook for the yen is no so bleak that I want to have plenty of cash to reload on the short side during the slightest recovery. I will move to closer strikes and more distant maturities to maximize your profits. It is now looking like we will soon challenge the 2013 low for the (FXY) of $94.80 and the $72 high for the (YCS).

We have a lot of new readers on board now, as my white-hot performance has become a talking point in the hedge fund community. So for the newbies to familiarize themselves with the basic structural flaws in the yen, please click here http://www.madhedgefundtrader.com/rumblings-in-tokyo-2/, here http://www.madhedgefundtrader.com/ne...r-craters-yen/, and finally here http://www.madhedgefundtrader.com/ne...ushes-the-yen/.

[John Thomas]

The Chart of the Day is Autozone (AZO). I found the stock by sorting the New High List for frequency in the last month then panned through the chart using the Flipchart feature. I picked the stock for its recent momentum. The stock has a Trend Spotter buy, a Weighted Alpha of 25.00+ and gained 21.50% in the last year. In the last quarter while the S&P 500 Index was up 8.31% the stock was up 10.11%, that's 24.8% better than the market.

It is a specialty retailer of automotive parts and accessories, primarily focusing on do-it-yourself customers. Each of the company's auto parts store carries an extensive product line for cars, vans and light trucks, including new and re-manufactured automotive hard parts, maintenance items, and accessories. Many of the company's domestic auto parts stores also has a commercial sales program, which provides commercial credit and prompt delivery of parts and other products to local repair garages, dealers and service stations.

[John Thomas]

As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price.

[John Thomas]

What can a 90 year-old woman from Nebraska teach us about finding profit opportunities in today's downtrodden mining sector?

Let me tell you a story.

In 1983, Mrs. Rose Blumkin -- nonagenarian proprietor of Nebraska Furniture Mart -- was approached by a local investment fund manager who was interested in putting money into her family's business. After talking with "Mrs. B" and observing her Herculean managerial style about the store, the buyer handed her a check for $55 million. No audit of the books, check of inventory, or verification of property titles. He saw all the qualities he liked in Mrs. B -- and was willing to pay a lot based on a few key observations and a handshake.

That man was Warren Buffett. I've learned a lot by studying his examples, like the one above, and applying them to natural resources investing.

This "be like Warren" message is an important one for my Junior Resource Advisor readers. That's because investing in mining -- and particularly its highest-potential-return sub-sector, exploration and development -- is radically different from conventional investing.

Unlike banks or manufacturers, mineral exploration and development companies have no revenue or cash flow. I've sat in meetings with Wall Street bankers and been asked about the price-to-earnings (P/E) ratios for these firms -- and had to point out that the number is technically infinity, the inevitable result when you divide any P by an E that is zero.

So why should we care about these serial spillers of red ink? Because, when done correctly, exploration can yield profit multiples nearly unmatched across the investment universe. In the mineral business it's possible to spend millions of dollars identifying an in-ground asset through sampling, drilling and compilation of results, and come up with a single, massive product that commands a one-time sale price in the billions.

Many observers believe that the exploration market is dead today. With commodity prices slumping and the valuations of major miners down, who cares about finding new ore deposits?

But my analysis shows something completely different. The market for exploration properties is as active as it's ever been -- if not more frenetic.

Look at the chart below. I've plotted acquisitions of exploration properties during the second quarter of this year. These are deals where one company pays another to purchase the rights to a mineral project.

[John Thomas]

As we head into the final weeks of 2013, European central bankers are on pins and needles. They're hoping the fourth-quarter economic data reveal signs that the Continent is truly on the mend.

An early November report from the European Commission sees signs of that upturn coming. The report's main takeaway: "The signs of hope that we saw last spring have started to turn into tangible positive outcomes. After six consecutive quarters of stagnation or contraction, the EU economy has posted positive growth in the second quarter of 2013. The recovery is expected to continue, and to gather some speed next year."

Indeed, while the European economic region likely contracted a bit in 2013, these economists predict GDP will likely grow 1.5% in 2014, and perhaps 2% in 2015. And where will that strength come from? "Domestic demand is expected to take over as the main engine of growth," they predict.

If they're right, then it's useful to make sure you have European exposure in your portfolio. Heading into Labor Day, my colleague David Goodboy profiled the Vanguard FTSE Europe ETF (NYSE: VGK).

A quick look at a five-year chart of this ETF against the S&P 500 Index shows the extent to which European blue chips have lagged. The outperformance for U.S. stocks really began to pull away in late 20109, when it became apparent that the U.S. economy was on the mend while Europe was not. Now, with Europe perhaps on the mend as well, global investors are likely to allocate more funds to European stocks and funds.

[John Thomas]

Dividend investors crave predictability. Once they lock onto payment streams, they don't want to hear about any interruptions. And if a company dares to withhold a quarterly dividend payout, then many investors simply head to the exits.

I discussed this phenomenon recently with regard to Carl Icahn and his big stake in CVR Refining (NYSE: CVRR).

As I noted earlier this month, CVR had a big hiccup with its third-quarter dividend, but it appears positioned to pay out $3 or $4 per unit in dividends next year. Shares trading around $22 don't begin to reflect that potential income.

Amazingly, a virtually identical scenario has just played out with another oil refiner. And the setup is every bit as compelling.

A series of technical problems at a key refinery led to a sharp drop in output for Alon USA Partners (NYSE: ALDW), the master limited partnership (MLP) of Alon Energy (NYSE: ALJ). In fact, the quarterly production was so weak that Alon USA Partners didn't simply make less money -- it lost money. And though investors were bracing for a smaller than usual dividend, they got nothing. Shares of ALDW, which traded up toward the $30 mark in the spring, are now below $14.

[John Thomas]

The cost of energy production isn't just about money. There are also environment effects.

Last year, according to one environmental group, hydraulic fracturing (commonly known as fracking) alone generated an estimated 280 billion gallons of toxic wastewater, enough to flood Washington, D.C., to a depth of 22 feet. It's no wonder that there's a strong push to institute cleaner practices.

Green initiatives have come to dominate the corporate landscape and are attracting investment flows in record numbers. The performance in alternative energy this year is evidence of this growing trend -- the iShares S&P Global Clean Energy Fund (Nasdaq: ICLN) is up more than 50% year to date. While most of the attention has been focused on renewable energy and clean coal, environmentally friendly sectors like pollution and treatment controls have gone relatively unnoticed.

Calgon Carbon Corp. (NYSE: CCC) is a small-cap stock involved in the purification and treatment of water, air and food, as well as the poisonous emissions from coal-fired power plants. The company has been making tremendous strides in cost reduction, improving operating margins to around 20% from 13.6% just a year ago. (Calgon's leaner operation is one reason the research staff at StreetAuthority's Top 10 Stocks advisory recently named CCC a Top 10 small-cap stock.)

Calgon reported earnings on Nov. 5 and the results were right on line with expectations at $0.22 per share. Gross margins continued to grow, to 33.3% in the most recent quarter from 27.3% a year ago. The demand for activated carbon cloth, used in water, food, and other specialty markets, contributed to a 28.2% gain in consumer sales. The company's cash position climbed 65% from last year to about $30 million, while long-term debt increased only 8.7%, to $48.3 million.

Calgon's stock looks like a value in comparison to CECO Environmental Corp. (Nasdaq: CECE), its closest competitor, trading at around 25 times earnings while CECO trades at over 38. It also looks better from a debt standpoint, with a debt-to-equity ratio of just 0.54 compared to CECO's 1.09. While Calgon's stock is up 44% year to date, CECO's is up 58% and could be due for a pullback.

Looking to the future, Calgon sees opportunity in the mercury removal business. The current annual demand for mercury removal stands at 130 million to 180 million pounds and could grow to as much as 765 million pounds by 2016 as the EPA begins enforcing mercury removal regulations on industrial boilers and cement manufacturers.