Friday, November 4, 2011

3 Health Care Stocks That Could Gain 50% or More

If you want to invest in health care, then wait 'til next year. That's what investors are saying after seeing their stakes in seemingly robust health care stocks fall from grace this year. But as the calendar turns over, I see three stocks in particular that have caught my eye as potential major rebounders. Each of these stocks has at least 50% upside if a few headwinds turn into tailwinds, regardless of how the broader economy fares. Here they are...

1. Intermune (Nasdaq: ITMN)
When pursuing up-and-coming biotech stocks, it pays to focus on companies that have significant market opportunities. InterMune, which is targeting the idiopathic pulmonary fibrosis (IPF) market with its Esbriet drug, could well be looking at billion-dollar sales levels one day. To be sure, such a milestone is still several years away.

Esbriet has received European regulatory approval (which helped propel its stock to $35 late last year), but initial sales have been slow to build. Quarterly revenue remains below $10 million and is unlikely to top this mark before next spring. The slow ramp and concerns about Esbriet's efficacy have pushed shares down into the mid-$20s. Yet analysts say InterMune could build a real head of steam, ending 2012 with a $400 million annualized revenue run rate.

First, those efficacy concerns are starting to abate. At a medical conference in September, InterMune released fresh test data that show a measurable improvement in patient outcomes. After attending the conference, Brean Murray's Brian Skorney concluded a rising number of physicians intend to use Esbriet with their patients. "Shares remain substantially undervalued for a commercial organization with the first approved therapy for IPF and believe launch metrics will justify an upside move in the next 12 months," he said. Skorney sees shares rising to $50, nearly double the current price.

U.S. regulators haven't yet approved Esbriet, though recently-released safety data has sharply boosted chances of eventual approval. Any such announcement could quickly propel shares up toward Skorney 's target price.

2. Alere (NYSE: ALR)
This company, which changed its name from Inverness Medical Innovations in 2010, has long been an impressive growth story. Sales shot up from $487 million in 2006 to more than $2 billion in 2010, thanks to rising demand for its health-related diagnostic kits. The kits help consumers and doctors quickly learn of exposure to a range of infectious diseases, various cancers, drug abuse and women's health issues.

But the slowing economy has cooled demand for many of these tests, as consumers dial back discretionary spending on health care. Sales are expected to grow about 10% this year, but would have actually shrunk were it not for a few tuck-in acquisitions. This has pushed the stock down from about $40 this past spring to a recent $26. The forward earnings multiple, as a result, has now slipped below 10.

But a turn may be at hand. Alere delivered a better-than expected third quarter, highlighted by earnings per share (EPS) of $0.67 -- $0.08 ahead of consensus forecasts. A deeper look at the quarterly results reveals a clear trend: Diagnostic tests ordered up by doctors is showing rising demand, while consumer demand for at-home tests appears to be flattening. This trend is likely to continue if the company prevails in its bid to acquire Anglo-Norwegian Axis-Shield, which offers a range of professional diagnostic-testing services.

After the steady drop throughout 2011, shares now trade for just four times projected 2011 free cash flow (according to Goldman Sachs forecasts). The key to a rebound back to the $40 level is proof of sustained growth in 2012 and beyond. The just-released quarter is a start. A few more quarters like this, and investors are likely to warm up this stock once again.

3. Eresearch Technologies (NYSE: ERT)
I profiled this company 18 months ago after it had just made a major acquisition. During that time the provider of outsourced drug-testing services looked poised for robust growth. Back then, I suggested EPS could exceed $0.50 in 2011 and perhaps $0.60 in 2012. Well, I was being too ambitious. Company-wide gross margins have slumped, and the company has been slow to generate expected synergies from that 2010 acquisition (it bought the research division CareFusion (NYSE: CFN), in an $81 million deal). As a result, shares have fallen from $8 back then to a recent $5.

It now looks as if my analysis was actually accurate, albeit premature. Recent quarterly results, highlighted by a swelling backlog of a record $343 million, set the stage for an improvement in results in 2012. "FY12 is shaping up to potentially be a double-digit revenue growth year," predict analysts at Auriga Securities. They see EPS (finally) exceeding $0.50 next year and figure if the company can hit this mark, then shares could rise up to $9, more than 75% above current levels. Analysts at Dougherty & Co., however, have a more modest $7.50 price target, noting that the stock "is trading at a no-growth multiple though we expect the company to grow revenue at least in the mid single-digit percentage next year." Still, this would be nearly a 50% gain from current levels.

Risks to Consider: The health care sector is currently in flux. Any major reimbursement changes, either from the government or health maintenance organizations, could hamper these companies' ability to meet 2012 sales and profit targets.

Action to Take --> These three companies share one common trait: the past year has not played out as many had expected when the year began. But each of these companies, all of which have seen their stock fall steadily from a 52-week high, look to have at least 50% upside, and are poised for solid annual results in 2012 and beyond.

China Runs Out of Money

Companies' cash is drying up, with dire consequences for their workers ... Unpaid wages in China ... Efforts to curb inflation in China are having some painful side-effects. A squeeze on bank lending has prompted some businesses short of cash to stop paying wages to blue-collar workers. Even the much-vaunted state sector is feeling the pinch. Work has all but ground to a halt on thousands of kilometres of railway track, and many of the network's 6m construction workers have been complaining about not being paid for weeks or sometimes months. – Economist

Dominant Social Theme: One thing is for sure, the Chinese communists know how to run a capitalist economy and have done a helluva lot better job than Europe or America! Something about socialism really gives people the "smarts."

Free-Market Analysis: The editors of the Economist "newspaper" – who never met a tin-pot dictatorship or dictator that they couldn't find some way to praise – have apparently "hit a wall" when it comes to China. That great hope of capitalism (Communist China) is broke and heading for a hard landing. No_money

After singing the praises of China and its vibrant "free market" for years, the Economist editors have now run smack into reality, giving rise to this squib of a story that indicates the ChiComs are hitting the proverbial brick wall when it comes to their hyperactive and impossibly stimulated economy.

We're not supposed to understand this, of course. It's an elite dominant social theme, after all, that the ChiComs' murderous command-and-control economy has much to recommend it that the West's anarchic and "free" economies (sarcasm off) do not. Here's some more from the article:

Migrant workers from China's vast countryside are usually the first to suffer when employers find themselves strapped for cash. In February a revision to the criminal law made it illegal for a company to withhold salary if it had the means to pay. This has done little to protect the more than 150m rural migrants who perform most of the country's manual labour ... The $600 billion stimulus launched in 2008 is all but spent. Indeed, the central government has urged state banks to cut back on lending in order to curb inflation, which in the year to July reached a three-year high of 6.5%, before dropping to 6.1% in September.

In recent weeks a credit crisis in the eastern city of Wenzhou has led to the flight of dozens of businessmen, leaving thousands of workers at private companies unpaid. State firms are little better off. After two record years of track-laying, the problems now facing the railway-building industry are severe. The government has had a change of heart about rapidly expanding the high-speed rail network following a fatal crash of two high-speed trains in July.

But bank credit drying up has also played a big part. China Daily, an English-language newspaper, says many of the industry's migrant workers have not been paid for months. Complaints have been growing. A senior railway official quoted in the state media said workers at China Railway Engineering Corporation, one of the country biggest civil-engineering firms, had submitted more than 2,000 petitions to the authorities since July. Another newspaper, Economic Information Daily, said wage arrears and protests by rail workers had "alarmed" top leaders in Beijing. Only a third of railway construction projects were continuing normally, it said.

The power elite had evidently and obviously hoped to contrast China's "vibrant" quasi-controlled economy (their description) to the West's chaotic and uncontrolled one (their description). But China appears to be unraveling faster than expected. The Chinese central bank (state owned) doesn't seem to managing that ole "soft landing" very well.

In fact, as we've been pointing out for several years now, there's not going to be a Chinese soft landing. The rotting, empty Chinese cities and shoddy, tipsy skyscrapers, profligate and corrupt Chinese central bank, entrepreneurial flight (see yesterday's article) and rising civil violence across the country (so bad it's not being reported formally anymore) should be red flags (no pun intended) that explain what one needs to know.

The Chinese miracle is dead. It never existed anyway, anymore than the West's late-20th century consumer mania was a product of Anglo-American "genius." No, the story of modern directed history is the story of elite-controlled money stimulation and central banking largess. Control tens of trillions and you can control the world. And they have. Not just in the US but in China, too.

What is "real" in China? The current state of development? Or is it Money Power? The central bank, like Western central banks, has tens of trillions to float the pretense of the Chinese Miracle. Sure, the Chinese people constitute an ancient, wise and powerful culture. But you don't develop an entire country in 30 years. Do you?

Not in our opinion. Not without central banking super money you don't. But we are supposed to believe it anyway. Just as we are supposed to believe the big-brain central banking technocrats of the Chinese central banking authority can bring that large and populous country in for a "soft landing." Whatever that means. Would the elites lie to us? Would they?

When the bust comes – and it is coming – all three legs of the stool will have been knocked away. America, Europe AND China will be no longer capable of firing the cylinders of the modern central banking economy. The world will sink into the deepest depression it has ever known. Chaos and worse will sweep across the world. And what then?

Conclusion: Are the elites waiting in the wings with their next fancy project? And what will it be called? World government?

Pic of the Day: Perpetual Payment Machine

Barton Biggs Boosts Bullish Stock Bets: AAPL, CSCO, MSFT, CAT, DE, EMR, GE

Barton Biggs, the hedge fund manager who bought stocks when the market bottomed in 2009, boosted bullish bets on equities in his Traxis Global Equity Macro Fund after European leaders took action to contain the debt crisis.

The fund's net long position has risen to 80 percent, Biggs, the founder of Traxis Partners LP, said in an interview with Betty Liu on Bloomberg Television's "In the Loop" program. That compares with 65 percent on Oct. 17 and 40 percent about a month before that, and near 85 percent six months prior.

The Standard & Poor's 500 Index is surging the most in a month since 1987, advancing 12 percent amid speculation European leaders will solve the crisis, after slumping from May through September. Investors remain too pessimistic, meaning the rally will continue as they change their mind, he said.

"There's a tremendous amount of money that's trapped out of stocks," Biggs said today. The rally is "going to continue for a while."

Stocks gained last week after the European rescue fund was boosted to 1 trillion euros ($1.4 trillion) and investors agreed to a voluntary writedown of 50 percent on Greek debt. Today, Italian and Spanish bonds fell, while global stocks retreated from a three-month high on concern European leaders will struggle to raise funds to contain the crisis.

"This morning, all of the wise men of Europe and the economists are very negative about this European deal that was worked out last week," Biggs said. "The general feeling is that the right thing to do is to cut back on risk and that it is going to be a flop, and that all they did was kick the can not very far down the road again."

"I am inclined to feel differently," Biggs said.

The investor said he likes technology stocks such as Apple Inc. (AAPL), Cisco Systems Inc. (CSCO), Intel Corp. and Microsoft Corp., which he called "incredibly cheap and undervalued." He also favors industrial companies such as Caterpillar Inc. (CAT), Deere & Co. (DE), Emerson Electric Co. (EMR) and General Electric Co. (GE)

Biggs said that while he's not buying European stocks, he is drawn to their valuations.

"I must admit I don't own hardly any European stocks, but I'm intrigued by them because they are so cheap, and because it would certainly be a contrarian trade," he said.

Peter Schiff On Yahoo Breakout

Louise Yamada: Gold & Silver Report

from King World News:

With gold still near the $1,750 level and silver roughly $34, today King World News was given the ability to share an extraordinary piece of legendary technical analyst Louise Yamada’s “Technical Perspectives” report. This information is not available to the public and we are grateful to Louise for sharing her incredible work with KWN readers globally.

Gold – Hugged the Uptrend Line
by Louise Yamada Technical Research Advisors, LLC (“LYA”)

Read the Article @ KingWorldNews.com

Top German news outlet: Just a "matter of time" before Greece leaves the euro

Spiegel continues to pile it on. Following yesterday's heartfelt thanks to G-Pip (as he is now known due to his impact on the EURUSD with every single public appearance), today they follow it up with: Greek Exit From Euro Zone Just A "Matter Of Time." To wit: "Despite its location on France's glamorous Cote d'Azur, Wednesday evening's meeting likely won't be a pleasant one for Giorgios Papandreou. The Greek prime minister is set to meet with German Chancellor Angela Merkel and French President Nicolas Sarkozy. None of them, one presumes, will be in the mood to enjoy their enchanting surroundings...Should Greek voters, frustrated by round after round of deep austerity measures, reject the bailout deal, it could result in an uncontrolled national bankruptcy. Markets will likely remain nervous until the results of the ballot are in -- meanwhile the euro will move even closer to the abyss. As if to highlight the dangers, German banks on Wednesday announced they were postponing their acceptance of the Greek debt haircut until after the referendum. Without voluntary bank approval, Greece faces a disorderly bankruptcy which could accelerate contagion throughout the euro zone. Papandreou's decision, said European Commissioner for Energy G√ľnther Oettinger, "puts the euro in even greater danger."

More:

Greek Exit From Euro Zone Just A "Matter Of Time"

Last week, it looked as though the euro had been saved. Now, in the wake of Greek Prime Minister Papandreou's announcement of a national referendum on the bailout package for his country, the common currency is even closer to the abyss. Still, say German commentators, it may have been the right move.

Despite its location on France's glamorous Cote d'Azur, Wednesday evening's meeting likely won't be a pleasant one for Giorgios Papandreou. The Greek prime minister is set to meet with German Chancellor Angela Merkel and French President Nicolas Sarkozy. None of them, one presumes, will be in the mood to enjoy their enchanting surroundings.

Leaders of the world's most powerful economies begin arriving on France's south coast on Wednesday night for the Thursday kick-off of this year's G-20 summit. Host Sarkozy had been hoping the gathering would focus on raising funds to boost the effectiveness of the euro backstop fund, the European Financial Stability Facility (EFSF), but the success of the meeting is now in doubt. Papandreou's announcement on Monday evening that he was planning to hold a referendum on the EU bailout package for his country has shocked and infuriated his would-be benefactors -- and sent global markets into yet another tailspin.
The news came less than a week after an all-night bargaining session in Brussels that resulted in an agreement to slash Greek debt by 50 percent, make a further €130 billion in loans available to the country and leverage the EFSF to €1 trillion. Markets immediately calmed and the euro began climbing against the dollar. (more)

Gerald Celente Talks to Alasdair Macleod

Shocking chart shows inflation is now soaring above 11%

We’ve been very, very clear that we will not allow inflation to rise above 2 percent. We could raise interest rates in 15 minutes if we have to. So, there really is no problem with raising rates, tightening monetary policy, slowing the economy, reducing inflation, at the appropriate time. That time is not now.

Federal Reserve Chairman Ben Bernanke
December 6, 2010

With all of the problems in Europe, protests on Wall Street, and middle east conflicts over the last year, something that has escaped scrutiny by prime time media stars and the general population is the consistent rise in prices across all consumer goods and services. While the Federal Reserve says they have inflation under control, their continued intervention into the financial and monetary systems of the global economy is leading us down a road that may very well lead to high inflation rates similar to those we saw in the 1980′s, or perhaps something much, much worse.

For the Federal Reserve, policymaking these days is about deciding which of two imposing evils to take on – a decidedly moribund economy or the increasing threat that inflation poses to battered consumers.

For much of the slow slog out of the financial crisis, the Fed which is meeting this week and will issue its policy statement Wednesday, has managed to train its gaze on jump-starting growth through its various quantitative easing measures.

But recent indicators show that inflation is posing an equally daunting threat that further monetary accommodation from the Fed might serve only to aggravate.

The pressure has come primarily through measures that Fed Chairman Ben Bernanke likes to call “transitory” – namely, the volatile but steady rise of food and energy prices that don`t make up core inflation measures but usually impact consumers more.

Economists increasingly believe that while the so-called core Consumer Price Index (CPI) measure has remained around the 2% level that pleases the Fed, headline inflation that includes things such as groceries and gasoline is becoming a growing menace. The more inclusive inflation measure is at 3.9% and hammering at consumers, including the 14 million who remain unemployed.

“Because of the level of debt that we have in this country and indeed over in Europe as well, market forces demand deflationary depression to occur,” said Michael Pento, president of Pento Portfolio Strategies and economist at Agora Financial. ”

But because we have such an activist Federal Reserve and central bank in Europe, every time they step into manipulating the market by depreciating the currency, we have these huge spikes in inflation.

Pento advises investors to disregard pronouncements from the Fed that inflation is under control.

“They`re being mendacious,” he said. “They are trying to fool you into believing that inflation is not a problem.

Source: Money Control

As of this month, we have reached Ben Bernanke’s 2% threshold for the official Consumer Price Index measure. The CPI-U (Urban measure, which includes food and energy) has reached 3.9%. And those are the official numbers.

Unofficially, if inflation was calculated the same way as it was in 1990, the CPI would show a staggeringly different number.

According to Shadowstats, we are now seeing price inflation rates of over 11% – almost three times higher than the official numbers.

Perhaps Ben Bernanke, Tim Geithner and President Obama don’t see it, but consumers are certainly feeling its effects. As a result, even though Americans’ wages are stagnating in nominal terms, they continue to spend money, which has analysts wondering what’s going on. They conclude that we’re spending more as a direct result of Federal Reserve machinations:

Americans are making a little more money and spending a lot more.

Under normal circumstances, that would be a troubling sign for the economy. But a closer look at some new government figures suggests another possibility: People are saving less money because they’re earning next to nothing in interest.

Saving is already difficult because of more expensive gas and food. It’s even tougher because of the lower returns — the flip side of super-low interest rates that the Federal Reserve has kept in place since 2008 to help the economy.

Critics say the Fed is punishing those who play by the rules — those careful enough to set aside money for savings or people who built up a nest egg and are living on fixed incomes that depend on interest.

Source: ABC News

What choice are people left with? They may not be consciously aware that inflation is over 10%, but their pocket books sense it. Why leave money sitting in a bank account when your cash savings will be decimated within a year? Equity investment has become too risky, with markets swinging 2% – 3% daily. This leaves only one option. Spend.

Curiously, this is the same activity we hear about consumers engaging in at the onset of high inflation periods. When money becomes worthless, it seems, the people shift it into hard goods as soon as they can. For some this may mean precious metals purchases, for others it may be flat screen TV’s or iGadgets. For the purposes of this demonstration in consumer spending habits in response to economic and monetary conditions, we don’t care what they’re buying – just that they are spending dollars as fast as possible.

Last year, Gonzalo Lira warned of a hyperinflationary tipping point by early 2012. While his time lines may have been off, likely because of the untold number of financial, economic and monetary variables at play, the consequences will be nonetheless as devastating as he describes.

What the mainstream commentariat will make of all this will be really something: When CPI reaches 5% by the winter of 2011, pundits and economists and the Fed and the Obama administration will all say the same thing: “Happy days are here again! People are spending! The economy is back on track.”

2012 will be the bad year: I predict that hyperinflation’s tipping point will be no later than the first quarter of 2012. From there, it will accelerate. By the end of 2012, I would not be surprised if the CPI for the year averaged 30%.

By that point, the rest of the economy – unemployment, GDP, all the rest of it – will be in the toilet. By that point, the rest of the economy will no longer matter: The collapsing dollar will make 2012 the really really bad year of our Global Depression

Much of how this plays out is dependent on capital flows and confidence. Right now, it looks like Europe may have received a stay of execution. That will be short-lived, and eventually all of our worst fears about the EU will materialize. Once that happens, we’ll have entered the next phase of this economic crisis – and it will be global. Shortly thereafter – and we’re talking perhaps months or a couple years – the US dollar will follow suit and collapse just like the Euro will.

Leading up to this we should see, as Lira forecast, steadily rising official CPI inflation rates. We’re officially at 2% and 3.9% on the CPI and CPI-U respectively. When the CPI hits 5%, consider that a warning sign that the good old days of a stable currency are almost finished.

One caveat we must add to this, is that governments and central banks around the world are doing their darnedest to hide what is really happening, so high inflation rates and hyperinflation may come out of nowhere and surprise all of us with their speed and severity. Furthermore, there is always the possibility of a complete loss of confidence in the world’s reserve currency resulting from a credit-event of some type that involves foreign debt holders unloading their dollars in a period of hours or days, as opposed to years.

Whatever the case, once the event horizon is crossed it won’t take long for us to follow in the footsteps of Germany (1923), Hungary (1946), Yugoslavia (1994), Argentina (2001), and Zimbabwe (2008),.

Author: Mac Slavo

Retail Stocks: “A Really Nice Contrarian Play” Says Strategist



Just in time for the holiday season, signs of softness showed up in the October retail same-store sales data —sales at stores opened less than one year. Overall sales increased a weaker-than-expected 3.7% from a year ago. Luxury retailers were hit the hardest, posting a combined year-over-year drop of 5.9%. Companies like Saks (SKS) and Nordstrom (JWN), as well as big box chains Costco (COST) and Target (TGT) are among the major retailers that fell short of analyst estimates.

Regardless, the overall sector is outperforming the broader market and technical strategists like Ryan Detrick of Schaeffer's Investment Research point to charts like the SPDR Retail etf (XRT), which is up 10% year-to-date, to support his bullish take.

"It's a really nice contrarian play," Detrick says in the attached video. "It's quietly one of the strongest sectors, yet again we continue to hear about all these troubles in the overall economy and U.S. consumer."

He's not denying there are economic headwinds and even points out the weakness in the latest polls that gauge consumer spending sentiment. The National Retail Federation predicts holiday sales will rise 2.8% to $466 billion this year versus a 5.2% increase in 2010. And the latest Gallup poll taken last week shows that Americans plan to spend a total of $712 on gifts this holiday season versus $715 estimated last year at the same time. The softness in sentiment is exactly why Detrick is going full steam ahead into the retail sector.

"We want to see that negativity or at least lowered expectations heading into the Christmas season, because with lower expectations you can have that upside surprise," says Detrick. "We think people will still be spending money; they say one thing, but go and do another."

From November through December retailers can make up to 40% of their annual revenue. It's a critical time period, so headwinds like the 9.1% unemployment rate, a housing depression, sustained high gas prices, and general uncertainty about the recovery are not to be taken lightly. "Nonetheless, price action is what really matters," says Detrick.

He's looking for retail stocks that have increasing earnings, strong price action, and he pays attention to analyst ratings. This leads to some of his favorite stocks in the sector: Chipotle (CMG), Costco (COST), McDonald's (MCD), Hansen Natural (HANS), Amazon.com (AMZN).

"When you have a sector that is quietly leading, people continue to hammer down on reasons not to like it, that's a sector that we're gonna take note of, and be long," he explains.

And if you're not willing to take a chance on individual retail stocks, Detrick recommends the SPDR Retail etf (XRT). He say it's the "easiest, cheapest, most efficient way" to get into retail.

Forget Gold or Silver. This Precious Metal is Extremely Undervalued

As of Oct. 27, gold spot prices were hovering around $1,747 per ounce. Platinum, on the other hand, was selling for about $1,636 an ounce.


This means it takes just 0.93 ounces of gold to buy an ounce of platinum. Or, from another perspective, you could trade in one ounce of gold for 1.07 ounces of platinum.

It's not so much the size of the gold premium that matters -- the very existence of a premium is highly unusual. In fact, gold hasn't been worth more than platinum since 2008. Before that, you have to go back to January 1992 to see the last time the yellow metal traded this far above parity to the white one.

In other words, platinum prices relative to gold are at their cheapest level in nearly 20 years.

This has been a one-sided relationship throughout the years. Platinum almost always has the upper hand over gold, in terms of price. That's to be expected, considering platinum is about 30 times rarer. Annual platinum production is just a tiny sliver compared with that of gold.

That's what makes this such an odd occurrence.

The last time it happened was December 2008, when gold was soaring as a safe haven, just as weak auto sales were sapping demand for platinum (which is commonly used in catalytic converters). In that particular case, platinum retook gold just a few days later and went on to post a powerful 130%-plus gain during the next two years.

This time around, the extreme ratio has persisted for a couple months. It's not so much because platinum prices have nosedived (they're down about 9% for the year), but rather because gold is in the 11th year of a bull market and continues to soar. Prices have climbed another 25% since the start of the year.

On Jan. 1, it took 1.25 ounces of gold to buy one ounce of platinum. That exchange rate has now slipped all the way below 1:1. This is more than just a statistical aberration...

As you can see from the chart below, we've been in unprecedented territory.



Platinum has traded about 64% above gold on average during the past decade. Based on this, and with gold at $1,747 an ounce, you might expect platinum to have surged above $2,800 an ounce. Instead, it has sunk below $1,650.

This means either gold is too expensive, or platinum is too cheap. Personally, I think it's the latter. Speculators might consider this an opportune time to enter a pair trade by going long platinum and short gold. This would remove any outside influences and just capture the performance of one metal against the other.

This strategy has a high probability of success because there's no reason for platinum to be below gold. But I'm not a trader, nor am I betting against gold. I think the better solution for long-term investors is to simply overweight platinum -- and not just because a chart tells them to.

Action to Take -->
Platinum group metals (PGMs) are irreplaceable and will remain in high demand. Auto production is expected to rise, which should boost demand. There are looming strike threats in South Africa, home to 80% of the world's supply. As my colleague David Sterman recently pointed out, the world's other major producer, Russia, has warned that output will begin falling.

You won't find any publicly-traded U.S. platinum companies. But First Trust has conveniently packaged all of the world's top suppliers in one place. For a modest annual cost of just 0.70%, the First Trust ISE Global Platinum fund (Nasdaq: PLTM) offers a diverse global basket of 24 major producers, including well-positioned leaders such as Impala Platinum and Anglo Platinum.

The exchange-traded fund (ETF) was punished during the selloff and was down nearly 50% for the year before a strong rally in October. But I still think this in an opportune entry point for long-term investors.