This Stock is About to Launch

We are just about at the halfway point of 2016. It's been a wacky year so far, but then, every year has its share of weird stuff. We've seen two pretty severe declines for stocks. The S&P 500 cratered 12% to start the year, and it fell 5% after the Brexit vote. Both times, stocks came roaring back. Starting on February 11, the S&P 500 rolled 250 points higher. And it's added 170 points since the Brexit vote... so far.

What's more, the S&P 500 is currently sitting at new all-time highs. That might seem a little weird, what with the U.S. economy still plodding and the serious questions about growth in pretty much every other economy on the planet. But as it happens, that's part of the reason U.S. stocks have been doing so well... In this world we live in today — with economies like Japan, Russia, Europe, Brazil, etc. — the "plodding" U.S. economy looks like a Ferrari in comparison.

There are $11.7 trillion worth of bonds with negative yields out there. Japan, with its insane rate policy, accounts for $7.8 trillion of those negative yielding bonds. Then there's the plummeting British pound and the uncertainty of the Chinese economy... you think the wealthy in these countries may be trying to get their money into U.S. assets? Yeah, that's what I would do...

And did you know that the U.S. recently made it easier for foreign investors to buy U.S. real estate? Changes to the Foreign Investment in Real Property Tax Act of 1980, also known as FIRPTA, have doubled the amount of money a foreign investor can put into a U.S. real estate investment trust, or REIT. No surprise that REIT stocks have been on fire lately...

(If you don't know, a REIT is a tax-exempt corporate structure that owns real estate, collects rent, and has to pay roughly 95% of income as dividends to its investors. That makes for some very nice (large) dividends that are great for retirement saving and income.

And the stocks are very stable, too. With one notable exception (*ahem*), real estate prices stay pretty stable. Besides that, REITs typically have leases signed with their tenants for 10- to 20-year terms, so cash flow is also pretty predictable and stable. My Wealth Advisory income/dividend service has done very well with REITs. We've got 213% gains on Realty Income Trust, 154% on data center REIT CoreSite, 122% on Omega Healthcare, and we've taken 27% gains twice on Tanger Outlets, which I share with you here.)

All in all, there is only one safe haven in the world, and it's the U.S...

But What About Valuations?

To get a strong stock market rally, you really only need two things. First, you need liquidity. You want stocks to go up, you gotta have the buyers and the cash to flow into the stock market. I think it's pretty obvious that there is plenty of liquidity out there looking for a place to be invested.

Second, you need opportunity. There has to be a reasonable argument that you can get some kind of a return on your money. Again, it's pretty obvious to me that the only place you can look for a reasonable expectation for a return on your money is the U.S. But you can't overlook the valuation aspect of U.S. investments. Some stocks have gotten expensive, like the REITs I mentioned before...

Now that the Fed has pretty much admitted that it can't hike rates significantly, Treasury bond yields have plunged. So money has flooded into REITs to get those juicy 5–6% dividends. Check out this 1-year chart of Realty Income Trust...

Realty Income Trust is a great stock. It's returned 16% every year since 1994. That's a crazy good track record. But I'll be honest with you: I can't recommend the stock at current prices. I mean, look at the run it's made. The valuation for Realty Income Trust is pretty high right now, and I think that string of 16% annual returns is about to be broken.

Now, that's not to say there aren't any good investments in the REIT space. In February, I recommended a completely undiscovered REIT that was paying 13% a year in dividends to my Wealth Advisory members. The stock is up around 60% for us, and the yield has fallen to 9%. And the stock is still undiscovered — I think it's got at least 50% more upside in the months ahead. (For more on this high-yield gem, click here.)

My point here is that you have to do some pretty good research these days to find stocks that have some upside opportunity. Which brings me to the meat of this article. Because I've got a stock that I think can be huge winner between now and the rest of the year...

Twitter... Again?

First things first: a disclosure. I recommended Twitter here in Wealth Daily back in December. I said: "I think Twitter shares could double in 2016. And if you can get them under $25, it's a good idea."

It hasn't played out exactly like I expected. Twitter shares are currently just above $18, and they've been as low as $15 this year. Investors have mostly given up on the company as it struggles to grow its user base. But Twitter has been reinventing itself behind the scenes and has made a few deals in recent weeks that can set the stage for a pretty remarkable turnaround...

To set the stage, let me ask you this: Do you watch NFL football? It's easy on Sunday, when the major networks show the games. But what about those Thursday night games that you can only get with an NFL network subscription? Well, for the 2016–17 NFL season, you'll be able to watch those games for free live on Twitter. And get this: Twitter paid just $10 million for the rights. It's reportedly already sold $50 million in ads...

And that's not the only deal it's made. Twitter Inc. (NYSE: TWTR) has entered into a partnership with the Pac-12 collegiate division to stream live events on Twitter. Deals with Major League Baseball, Major League Soccer, and Turner Networks have either been announced or will be announced soon.

Do you see what's going on here? The big TV networks want to see if streaming live sports events on the Internet can lead to increased viewers and more ad sales. And they have picked Twitter to do it. I think it's a pretty good bet that investors are about to start paying attention to Twitter again soon...

And that's not all.

I don't know if you're aware of the struggles that the ESPN sports network has been having. Subscriber numbers are falling as people ditch cable pay TV and subscribe to Netflix, Amazon, and other "pay as you go" channels. ESPN is owned by Disney, and Disney is currently looking for ways to deliver ESPN direct to viewers and circumvent the cable monopoly. And it just so happens that the Twitter CEO Jack Dorsey sits on the Disney board of directors. I will not be at all surprised if Disney starts streaming EPSN content on Twitter. That would be a huge deal, and Twitter shares would definitely go higher.

So, if you want a good shot at a 100% winner by the end of this year, Twitter is a pretty good bet.

Until next time,

Briton Ryle

@BritonRyle on Twitter

An 18-year veteran of the newsletter business, Briton Ryle is the editor of The Wealth Advisory income stock newsletter, with a focus on top-quality dividend growth stocks and REITs. Briton also manages the Real Income Trader advisory service, where his readers take regular cash payouts using a low-risk covered call option strategy. He also contributes a weekly column to the Wealth Daily e-letter. To learn more about Briton, click here.