 Good day, fellow investors. Today I'll discuss seven rules, how to find value low-risk stocks that are about to double. And I'll do that by analyzing six case studies, so six stocks that have doubled. So I have recently made a video where I discuss how Buffett said that he could do 50% a year. And these are the rules that you have to use in order to accomplish the same thing. So let's immediately start with the stocks and the rules will come out from there. The first stock I want to discuss is Hutbay Minerals. Hutbay is a copper miner whose stock prices, you can see, has been very, very volatile. However, the stock is up 104% in the last year and has been up twice so much. What happened with Hutbay? Hutbay owns a long-term project like the Rosemont project and the Constancia project, also long-term mine in Peru. As you can see here, there is a lot of value in the Rosemont project. The net present value is relatively high but with high copper prices the mine life is 19 years, so there is plenty of value. However, analysts don't care what will happen in 19, 10, 5 years. They care only what happens in the last quarter and then they replicate that into the next quarter. This is a headline this is a headline from May. Hutbay Minerals misses by 11 cents and also misses on revenue a lot by 63 million. The reason for the miss was an unscheduled mill maintenance issue where some engines didn't work so well so they changed everything on those engines, late sales so they postponed sales in the next quarter so there was more inventory. Nevertheless, analysts didn't like it. The stock got into a negative environment and was sold, sold, sold alongside copper prices that were unstable. A month later, so this was its beginning of May, the stock kept dropping till June. A month later the stock turned around and doubled in a few months. Why? Because there was value in the low-cost production, long-term production, huge cash flows and you can check the link for the video that I analyzed the company and recommended it as a buy back in June. In this case the thing to remember is look for long-term strength in a strong sector, in this case copper, with strong long-term prospects, in this case two great long-term mines and temporary issues that are really temporary. So you have to really check temporary issues, some outage of a mill, of a grinder, something makes the company look bad in one quarter but in the long term it's just a blip that will not even be felt. However, if the stock sentiment gets negative then it's time to buy. The second stock I want to discuss is UPuy Holdings. This is a wealth manager in China. Here the situation is a little bit different, the business was doing great, the growth was there, the dividend was also there, it was around 10% up to a few months ago but the stock went nowhere. This is because Wall Street has in general negative sentiment about Chinese financial companies and when I wrote an article about UPuy on seeking alpha a respected analyst immediately wrote you have to check if the company is real as you can see here because many analysts and investors were afraid that it is another Chinese scam and that's why they didn't invest in the company. However, as the company increased the dividend as the company was growing at 60% sooner or later those companies explode so you just have to wait while you wait you get your 10% dividend. This is the growth for the company 100% per year in a sector that is about to explode in China. As China has no Wall Street they are the new Wall Street of China so you want to be exposed there. There are many risks from real estate risk however UPuy is just an intermediary, just get the commission they don't take risks on their assets. So what had to be done you had to find someone in China that can search is the company real or not go perhaps to an agency of the company and look okay are they for real or not and they have gotten a lot of awards that led me to believe that they were really for real and the dividend was there a fake company doesn't have the cash to pay a dividend so it was really a lot of signs were telling that it was a good bet and sooner thankfully sooner than later it proved out a good bet. Another company that's very interesting was YY, a Chinese live streaming company with a lot of nice girls waving at you. Why people didn't invest in this company because it's a new business model everybody prefers to invest in all business models that are tested many many times over however when there is a new business model where the company makes money when viewers give gifts virtual gifts to these performing artists then it's a very very difficult business to understand. So the stock price was volatile went up in 2014 as the company was growing however then a competitor came in Momo and the stock dropped extremely low to below $40 per share and a company that was growing 47% in revenue was trading at a price earnings ratio below 10 yes 40 40% growth price earnings ratio below 10. So in this case you really have to look at fundamentals look at the market the live streaming market in China was growing at a fast pace so even if Momo was taking huge market share YY was still growing and profitable and investing and doing very good business so at a price earnings ratio of below 10 to find a company that is growing about 30% and is expected to continue to grow in the future was simply too crazy to avoid and the result is that the stock quickly doubled. Another company that's very very interesting is capstone paper and packaging as you can see here the stock was trading at above 30 and then it suddenly dropped to below 10 i think it went to seven. Only two in 2016 recover again to above 20 25 now it's a 22. So the company is in the corrugated paper business they make the boxes when you get your things or shipped or your cafe latte at Starbucks so growing trend there is more more need for such kind of paper however the company was showing unlinear earnings because it's a company that bets on growing with acquisitions so you have a growing trend more use of such kind of paper and they are smartly acquiring other companies integrated them and taking advantage of the synergies that has worked very well in the past however in 2015 they acquired victory packaging and the synergies didn't immediately come up because the price of paper in 2016 was declining a little bit global competition there were one two quarters that didn't show extreme growth however the company continued to pay the dividend so the price to book value was nine dollars the stock price was below that so it was really really a bargain with the margin of safety because it was still paying a dividend always profitable they just didn't manage to get the profits they expected immediately for on the victoria acquisition as soon as the next two quarters passed they managed to take advantage of the synergies and the stock price returned there where it was supposed to be with more strength coming from price of paper because it's a growing trend so again we have temporary misunderstanding from analysts and a growing trend something you cannot miss what's also very interesting about capstone is that you can find a bargain but the stock price can go much much lower than you thought about so you always need to have a cash cushion to buy more if you're convinced about the stock in this case i started buying at 11 they are bought a little bit more at 9 and then the stock price didn't reach my next buying target but it went down to almost 7 and then i had to buy more somebody would panic sell and that's the worst thing you can do if you do did good research you have nothing to be afraid of but remember always buy in little stages never buy a full position immediately and always have a cash cushion on the position to buy more now you might ask why am i talking about the stock that has fallen 75 percent in the last year but i want to discuss teva because it's a very interesting thing and shows something very important everybody was thinking teva is a bargain at 50 teva is a bargain at 40 teva is a bargain at 40 teva is a bargain at 20 and now it's trading at 16 perhaps even lower as you will be watching this the issue was the tevas management was constantly very positive about earnings about repaying debt and they really made me believe okay this is really a bargain at 40 because expected long-term average earnings will be above five so i'm buying pharmaceutical in a defensive sector at a price earnings ratio below eight and there is expected growth when it was at 40 i was buying so price earnings ratio expected future was six so it was extremely cheap and i expected okay i buy here the book value was also around 40 so there is was a margin of safety i thought but that was mostly goodwill from an acquisition and what i learned is never listen to the management if you look at their projections what they were saying oh that the company was such a bargain the stock would double however you have to always look also for the other companies that at researchers that are independent because only then you can get the right picture about the stock so when you find the stock that's interesting don't listen to the management find researchers the talk from a different perspective about the sector and if those researchers confirm the growth then relook at the stock don't trust the management so that's what i learned from teva and whenever you see a bargain look around what's going on don't trust the management and try to see for yourself if it will work or not because the management's job is to be positive if not they would be fired so never listen to the management another very interesting stock is highly on education and here the question is all about liquidity this chinese stock also was very flat since it IPO'd it was trading at the price earnings ratio 15 and price book value of 1.6 and was growing at 25 per year compared to other chinese companies this is when i was doing the analysis of the company the data somewhere in april i think compared to other companies it was really the best chinese education stock price earnings ratio load price book to book value very low in comparison to others and strong growth the others with a low p e ratio didn't have such growth in addition the company just built a new school so they hired a lot of teachers so their expenses went up but their revenue went up only as the normal rate of increasing students went up so as the new school gets filled with students their their expenses will remain flat and the revenues will rise increasing their profits so that was a pretty clear investment very nice company and i tried to invest in it but you couldn't in a day create a position so you had to be very patient over a week over two weeks buy a little bit here buy a little bit here different prices position yourself and i didn't like it so i pulled out and i sold at break even however if i would have kept the small position i accumulated the stock sooner or later has exploded because the business was good healthy growing and it was clear that earnings will double so very interesting stock think about having a part of your portfolio in illiquid small caps if you can find great illiquid small caps you will find great businesses great earnings returns great dividends at the bargain price and they can really really add value to a portfolio however you have to be patient with the liquidity and be patient with the unlocking of the value very interesting rule to follow all right let's summarize the seven rules we have discussed in order to find low risk investments that will double the first rule is look for temporary issues in a growth sector so if the fundamentals of the company are good if they are profitable if the sector is growing and there are just temporary issues which analysts hate and they replicate those issues into the future and the stock gets into negative sentiment that's the time to buy but be sure to differentiate between temporary and structural issues that's very important number two look for companies that are misunderstood from the market or the market doesn't want to watch those sectors in like in this case china from a year ago to last two years wall street hates chinese company because there was a bubble the bubble imploded and since then nobody wants to touch china so really look there where nobody wants to go there are usually the best bargains because people in china will still turn on electricity they will still use internet and they will do whatever they have been doing in the past they will continue doing and even more so if you look at sectors that nobody likes nobody understands you can find great great bargains number three always look at fundamentals tangible fundamentals strong fundamentals growth sectors because those provide the margin of safety price to book value below one tangible book value then you can be assured that you won't lose when the value unlocks who knows be patient in the meantime you know you can just accumulate more if the stock goes lower this leads to number four always expect that the stock price can go even lower in a negative surrounding you never know when a stock will hit bottom so you have to start buying have a cash cash and buy more if you're convinced that it's really a bargain number five look for volatile earnings nobody likes volatility everybody likes linearity and if you can find business models that have volatile earnings take advantage of that buy on the cheap sell on the high because you know the earnings will be volatile and take advantage of that try to think a little bit more long-term than the two quarters every analyst is thinking about number six never ever trust the management always perform your own research independent research and then see if it fits the management's view if it fits okay if it doesn't stay away perhaps you'll miss some opportunities but you won't lose when the management is wrong or lying number seven liquidity always comes at the premium so if you buy in liquid stocks you can really buy cheap bargains and with part of your portfolio you can put it there leave it to sit and sooner or later again the value will unlock especially if it's a growth company sooner or later it's recognized by the market so this were the seven rules and the six stock cases hope you liked subscribe there will be plenty more stocks that will double on this channel with low risk I can guarantee you that because the stock market constantly provides opportunities thank you for watching and I'll see you in the next video