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In the mid 1960s, Monogram Industries benefited from a period of rapid growth among airlines. Carriers moved from older propeller planes to faster, quieter new jet engines. That put them, and Monogram, in favor among stock market traders.
The reason? Los Angeles-based Monogram made its name as a supplier of self-contained toilets for those jets. Sometimes you can participate in an industry move by looking at suppliers, especially those that stand out in earnings and efficiency.
On top of that, Monogram also hired new management that came in and cut costs. It all helped Monogram's stock make an 890% advance from the first marked-up base as soon as the market had a follow-through day on Oct. 18, 1966, until the stock was sold into a classic climax top. This all occurred within just one year and six weeks.
Notice that Monogram was one of the first stocks to break out and soar as soon as the 1966 bear market ended. The price-to-earnings ratio was 18 and expanded to 74 at the stock's top.
Stock Market: How To Watch For Future Leaders
Every new bull market tends to discover 15 to 20 new big winning stocks. The more you carefully learn what past leaders looked like, including their fundamentals, the better your probability of recognizing and capitalizing on future big winners.
You specifically want to know what the leaders looked like before they made their major price moves. Remember to study very carefully the way they moved up. Buying right is only part of the equation.
You also need holding rules to avoid the pitfalls that can shake you out of a good stock. You also need selling rules to get you out when the move is over.
Keep and save all of these examples given once a week. Soon you will have your own book of what dozens of market winners did that made them so great.
Editor's Note: Monogram is now part of French aerospace company Safran. This column originally ran in Investor's Business Daily as part of a 2012-14 series on America's greatest stock opportunities, written by IBD's founder, the late William J. O'Neil.
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