Tag: saving

Is PacBio A Millionaire Maker?

Is PacBio A Millionaire Maker?

ericmilton

What do Amazon, MercadoLibre and Shopify have in common?

If you bought 1000 shares of any one of these companies early in its lifecycle, you could have had a millionaire maker.

A millionaire maker is a stock that singlehandedly turns you into a millionaire, provided you’re not one already.

Millionaire makers are easy to spot in hindsight, but extremely difficult to identify in the present.

Take Amazon (NASDAQ: AMZN) for instance. At the beginning of 2002, AMZN was trading at $10.82 a share and had a market cap around $7.5 billion. This was right after the dot-com bubble burst, and AMZN was looked at by many as merely a survivor.

Over the next 18 years, AMZN would go on to become a compounding machine, appreciating 29,000%. If you’d bought 1000 shares at $10.82, and held it until today, you would have $3,150,000.

So…what are the characteristics of a millionaire maker stock?

If we look at AMZN, MercadoLibre (NASDAQ: MELI) and Shopify (NYSE: SHOP) we will find similarities.

Similarity number one: Each of these companies was the lead dog in a growing industry.

AMZN is the lead dog in e-commerce in the United States. MELI is the lead dog in e-commerce in Latin America. SHOP is the leader in e-commerce solutions for entrepreneurs in America.

Similarity number two: Huge TAM (total addressable market).

The total addressable market (TAM) refers to the amount of potential or anticipated sales in a particular industry. The TAM for each of these companies is massive. The opportunity in e-commerce alone is in the trillions of dollars globally.

Similarity number three: Millionaire makers tend to have optionality (but not always).

Optionality is the ability of a company to expand into new businesses over time, continuing to increase its TAM.

Thirty years ago, millionaire maker stocks did not have to have optionality. Home Depot (NYSE: HD), one of the greatest (if not the greatest) stock of all time, does the same thing today it did when it IPOed. In this new world, however, millionaire makers have to have optionality. For example, Amazon started out just selling books, and now it sells everything under the sun. It’s also the dominant player in cloud computing with AWS (Amazon Web Services).

Similarity number four: Millionaire makers tend to have smaller market caps.

If you want a potential millionaire maker stock , try to find companies with a market cap less than $10 billion. You could have bought MELI and SHOP when they were both valued at less than $1 billion. AMZN had the largest market cap among the three at around $7.5 billion before making its big move.

So…is Pacific Biosciences (NASDAQ: PACB) a millionaire maker?

I have no idea, but it has some qualities that I like when I compare it to previous millionaire maker stocks.

Who is Pacific Biosciences?

PacBio, according to its website, “provides sophisticated genomic analysis systems that deliver invaluable insights for scientists who strive to resolve complex genetic challenges.” PACB is the pioneer of long-read human genome sequencing with its HiFi sequencing method. Its current market cap is $2.88 billion.

How big is the total addressable market (TAM) for PacBio?

In order for a company to be a millionaire maker, it must have a huge TAM. Over the next five to ten years and beyond, genomics is expected to generate trillions of dollars in market cap. The future of health care will be to focus on preventing and curing disease using the most revolutionary medical breakthroughs of our time. Gene sequencing companies will play a huge role in making this possible.

When the TAM is potentially in the trillions, there is some serious money to be made! In 2002, when Amazon was a $7.5 billion company, very few people understood or knew its total addressable market. As it turns out, Amazon’s optionality made its TAM in the multiple trillions. Great management, execution and vision took AMZN from a small cap to a super mega cap with a current market cap over $1.5 trillion.

What is genomics?

The Human Genome Project was “the international scientific research effort to determine the DNA sequence of the entire human genome” (source: genome.gov). A genome is the complete set of genetic instructions necessary to build a living being – in this case, a human. In 2003, the cost of sequencing a human genome was $2.7 billion. Then Illumina (NASDAQ: ILMN) came along with revolutionary technology that lowered the cost of sequencing a gene from $2.7 billion to $600.

Is PacBio the lead dog in genomics?

The simple answer to this question is no. Illumina is currently the lead dog in genomics with about 90% of the gene sequencing market.

However, here’s what is so interesting about PacBio…

In 2018, ILMN made a bid to purchase PACB for $1.2 billion in cash. The deal eventually fell apart because the regulators were not going to allow it; ILMN is practically a monopoly in genomics, and purchasing PACB would have been a huge antitrust issue.

Now the question we have to ask ourselves is: why did Illumina want to purchase PacBio? PacBio has been a publicly traded company for a decade. During that time period, the stock has done nothing.

Well, although Illumina is the leader, it specializes in short-read next generation sequencing instruments, while PacBio has pioneered long-read sequencing. Long-read sequencing can detect difficult to sequence mutations called structural variants, which cannot be detected with short-read sequencing.

In addition, PacBio’s technology has made terrific strides since 2018. According to ARK Invest, “PacBio HiFi reads…produced more accurate data than…Illumina… suggesting that PacBio now is the industry leader in complete, highly accurate sequencing.”

In summary

Pacific Biosciences is a small cap company that may be on the verge of becoming the industry leader in gene sequencing. If PACB’s HIFI reads can become the industry standard in the age of genomics, they could very well become a millionaire maker stock.

 

My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

Click here to be taken to its Amazon page.

(Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)

 

 

 

Guest Post: If You Follow the Program (you can have anything)

Guest Post: If You Follow the Program (you can have anything)

ericmilton

Hi, friends!

If you’ve recently started following me on Twitter, thank you! I hope you enjoy the blog.

Today I have a guest post from frequent contributor Chris Pascale. 

~Eric

If You Follow the Program (you can have anything) 

by Christopher Pascale

Through my writing, I’ve been able to meet some pretty cool people. One of them is retired military officer Douglas Nordman, who goes by “Nords”.

Nords and I have a mutual friend in the anonymous Grumpus Maximus, who runs a site by the same name, and through some minor coordination, we scheduled to meet up during this year’s FinCon, a personal finance conference, in Washington, DC.

First, I’ll say that Nords, despite being a bit of a celebrity among military people in the finance space, was incredibly accessible. We were sitting outside under an umbrella, and while talking, people began pulling up chairs to join us. One thing that really stuck with me was that while discussing nearly free travel via military “Space A” flights, Nords said that he and his wife typically travel twice a year for two months at a time – flying for almost nothing with great flexibility. Noting this, he said to us, “If you follow the program, once your kids are grown, you can do that, too.”

What Program? Doug Nordman’s?

When a guy who is actively building something talks about following a program, he almost always means something he’s created that you can buy. Dave Ramsey will say it’s the 7 baby steps, which you can learn about by taking his $500 class, reading his $20 books, or his podcast episodes for free. Clark Howard also has good products of a similar nature.

But Nords? He doesn’t mean that I can have a good life if I become his follower, so much as maybe follow in some of his footsteps.

And that’s what’s so unique about the F.I.R.E. (financially independent, retiring early) community. While some have, and more will, release books and other things you can buy, they are more passionate about bringing out a message than building a brand they can cash in on. And it’s because their initial business was setting themselves up for a lifetime of financial comfort. When they proved their program, they went out to spread their gospel.

And you should know what these programs are.

The F.I.R.E. Programs

Nords is a military retiree who was able to retire for good upon leaving the service. He recommends living within your means, so that you don’t have to keep working if you don’t want to. He has a book called The Military Guide to Financial Independence, and could have released 30 more, but appears to be happy with a life of travel and leisure, with some podcast interviews thrown into the mix.

It should be noted that Nords donates the royalties for his book, which is a testament to the fact that he is set up independently through a combination of a healthy pension, savings, and living within his means.

Paula Pant, who inspired part of the title of this piece, wants you to know that “you can afford anything, but you can’t afford everything.” She runs a terrific blog, and also a podcast where she’s interviewed Clark Howard and many others. She gives away her book, Escape, to anyone who subscribes to her online community. Her main point is that if you get your stuff in order, the life you want can be yours, but within the confines of what you’ve created. It’s when you leave your reach that you find yourself in debt and in trouble.

Pete Adeney, AKA Mister Money Mustache, says to make a high income, live in a place less like Silicon Valley and more like suburban Colorado, and live close enough to work so you can bike there. By doing this, he and his ex-wife socked away about half their combined $150,000 income, and at 31-years-old had a paid off house and $800,000 in cash. With only 1 car, 1 kid, no debt payments of any kind, and a low-cost lifestyle, he went on to do other things, like raise his son, accidentally create the cult of Mustachianism, and spread the gospel of not spending like a crazy person. He has no books, gives no seminars, and created a place in his hometown where people can hang out and talk about finance, home improvement projects, or just listen to music, lift weights, and drink beer.

Choose FI: Brad and Jonathan at Choose FI offer a foundation built upon their pillars of FI. They include overlapping guidance with Wealthy Joe in advising people not to try and time the market. They also recommend index funds, cheaper cell phone plans, and keeping grocery costs down by striving to serve meals that cost $2.00 per-person-per-meal. This could be eggs, coffee and oatmeal for breakfast. A salad with chicken breast for lunch. Meatloaf for dinner. It can be done, and it really works.

Millennial Revolution: Kristy Shen and Bryce Leung are a couple of badass mofos from Canada who will tell you that owning a home is downright terrible for your finances. When you’re done reading or listening to their stuff, you’ll have to embrace your cognitive dissonance with great vigor to get back to convincing yourself that the home you bought was a wise choice (I did it, and so can you!).

These whippersnappers are a couple of software engineers from Toronto who couldn’t seem to get their heads around the housing bubble, and so balked at buying. When everything crashed, they were only emboldened more so. Going back a bit farther, Kristy grew up in extreme poverty in China, where she would find toys to play with in the local dump. Their story can be heard pretty much anywhere for free, but they also have a book called Quit Like a Millionaire, which tells you to consider your profession for the success it can bring you. For example, the average author makes $5,000 a year when ALL AUTHORS, including Stephen King and JK Rowling, are included, whereas the average accountant makes $65,000.

Eric Milton here at Wealthy Joe has been saying for years to buy into good companies and then buy more. You get all of the content for free, and it evolves over time to discuss passing and “evergreen” issues. I found this site because I read The Stock Market is for Everyone, which I recommend highly.

So Many F.I.R.E. Writers. Are They All Good to Follow?

Like diets, the general idea is that they all work so long as you actually work them. Whole 30? I personally lost 14 lbs. one month just eating meat, fruits and vegetables. It was expensive, because I was eating all the time to make sure I never felt hungry in front of ice cream, but I really did lose 14 lbs. Weight Watchers? Sure. They literally watch you get weighed, and you don’t want to be heavier when they do. Increased exercise while changing nothing else? Definitely. Replacing soda with water when you drink it every day? A guarantee.

But you cannot do what every F.I.R.E. writer recommends. For one, if you’re not in the military, Nords’ advice is moot. If you’re like me and the expense of owning a home is one you prefer, then Kristy Shen will have to move on without you. If you’re not going to buy single stocks, how did you wind up here?

Also, no one knows everything, and you need to remember not to follow anyone as your end-all-be-all. Take me, for example. I can tell you how I hacked tuition in multiple ways, how to weigh expenses as being “worth it” or not, and about setting up your teens with Roth IRAs (Daughter No. 2 just started hers at 14!), but I have a fairly heavy personal debt load that my wife and I are only recently knocking out, as explained in a 2018 piece called Wife on F.I.R.E., so while I can tell you some things, I cannot tell you everything, and might not even be the right guy to tell you anything.

And now, we conclude.

If You Follow the Program…

Nords and Paula Pant said it best. If you follow the program – of saving and investing, and not having debt – you can have anything, if not everything.

But you know this. You know that you must save something, or you’ll be poor when you’re old. The key is to be on the program.

Christopher Pascale is an author, accountant and adjunct professor from Long Island. He is the former CFO of Portfolios with Purpose, and is a current member of the IRS’ Office of the Chief Counsel.

 

My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)