If you’re anything like me, data is becoming an ever more vital part of your life.

My use of digital data begins nearly every day before dawn. See, I rely on two apps to track my sleep. I check them while lying in bed after I complete my morning meditations.

I know not only how much deep sleep I got but also my heart rate and sleep efficiency. The other sleep app gives me the number of steps I took the day before, the rating of my sleep quality and – for my wife’s benefit – the length of time I snored.

Trust me, I’m barely scratching the data surface here…

I track my daily and weekly fitness goals with my Apple Watch.

When I hit the slopes, I track my speed, number of runs, vertical distance and the miles I covered with my Ski Tracks app.

While you might think I’m an isolated data freak, the fact is I’m well within the norm.

Data is becoming an industry worth a small fortune, and potential profit machine for the right firms.

See, 42 mutual funds just plunked down $1.1 billion on a stellar data analytics stock that’s set to report earnings next Thursday.

Today, I’m going to reveal the name of that stock, and show you five reasons why these mutual funds invested so much money…

Check it out…

Data Machines

The odds are very good you’re also playing a role in the reams of information being thrown off by our tech-centric society.

If you use a smart phone, tablet, laptop or desktop computer, you create tons of statistics in both the wired and wireless worlds. Ditto for any late model car or truck equipped with chips, sensors, software and GPS navigation.

The same holds for your Web browser, cable or satellite modem and Wi-Fi router. Every data center in the world generates more data in a minute than a human could understand in several lifetimes.

The online journal VCloudNews estimates we create 2.5 quintillion bytes of data every day. That’s enough to fill 10 million blue ray discs that if stacked together would stand four times taller than the Eiffel Tower.

No wonder IDC says the big-data analytics market is growing at 11.7% a year, and will be worth $203 billion by 2020. At that rate, the market will double to $406 billion by 2026.

Now you know why Splunk Inc. (Nasdaq:SPLK) has become a bona fide profit machine. Based in San Francisco, the firm ranks as one of the world’s top data analytics firms.

It specializes in machine data, or that which comes from the plethora of digital devices I mentioned a moment ago. Corporations turn to Splunk to make sense of data too complex to sift through on their own.

Founded in 2003, Splunk started making money less than six years later, a rarity among growth-centric startups. The company went public in 2012, and has amassed a strong earnings record.

So let’s run it through my five rules for finding market-crushing tech leaders. Take a look:

Tech Wealth Rule No. 1: Great Companies Have Great Operations. These are well run firms with top-notch leaders.

The top management team is staffed with savvy tech veterans, from Cisco Systems Inc. (Nasdaq:CSCO) to Thomson Reuters Corp (NYSE:TRI).

The company has won a series of awards and accolades. In fact, the list of them runs several Web pages long. I like the fact that last year, Forbes named Splunk one of the top 50 growth firms in the world.

Along with organic growth, Splunk has often turned to mergers to fill out the franchise. It’s bought at least 10 other firms since the fall of 2013, using them to add products and enter new markets.

Tech Wealth Rule No. 2: Separate the Signal From the Noise. To create real wealth, you have to ignore the hype and find companies that have rock-solid fundamentals.

Just weeks ago, Wall Street and the media were down on stocks across the board.

But seeing the enormous growth ahead for Splunk, Wall Street has plowed into the stock. Data compiled by Investor’s Business Daily shows that 42 mutual funds bought the stock and invested $1.1 billion in January alone.

That’s just a part this stock’s market-crushing record. In roughly the last two years, the S&P 500 has gained just 17%. By contrast, SPLK beat the broader market by 547%.

Tech Wealth Rule No. 3: Ride the Unstoppable Trends. Look for stocks in red-hot sectors because they offer the best chance for life-changing gains.

There’s just no question that Splunk has that nailed. Consider that the Internet of Everything alone will include a minimum of 50 billion connected devices.

Each of them are data streamers by definition. So, in less than a decade from now, we could generate enough data to stand more than 10 times taller than the Eiffel Tower – on a daily basis.

Tech Wealth Rule No. 4: Focus on Growth. Companies that have the strongest growth rates almost always offer the highest stock returns.

Splunk grew sales in its most recent quarter by 40%. That means it moving at a rate that is nearly 12 times faster than the overall U.S. economy. That was a slightly ahead of its three-year average of 37%.

It has not announced earnings for its fiscal 2019 fourth quarter or the full year and will do next Thursday. My gut tells me that we should see another great quarter, backed up by the fund managers moving in before the report comes out.

But should the firm miss forecasts and the stock goes down, I suggest you use that as an opportunity to jump in at a discount and build a long-term position.

Tech Wealth Rule No. 5: Target Stocks That Can Double Your Money

This is where we look at the firm’s earnings growth and see how long it will take to double profits. By doing that we can figure out how long on average it should take for the stock to roughly double.

I’ve gone through the firm’s financials in detail, and I’m projecting earnings per share will grow by an average 35% over the next three years. Given that it actually has more than doubled that rate during the last three years, this is a very conservative forecast.

Now we use what I call my doubling calculator. Mathematicians call it the Rule of 72. Let’s divide the compound profit growth rate of 35% into the number 72.

We find that it should double in almost exactly two years. But to be extra conservative, I extended that out to three years. With a $20 billion market cap, the stock trades at roughly $136.25.

But it won’t stay there long this year, as companies throughout the world turn to it to make sense of their tidal waves of data.

This is one of those stocks where it really pays to be in it for the long haul.

Cheers and good investing,

Michael A. Robinson

Source: Strategic Tech Investor