This is from an ad for Navellier’s Emerging Growth newsletter, which we’ve looked at before (its teaser company are breaking even for us so far, Smith Micro is down and Brookfield up, by about the same 20% or so … you can track this yourself in the Gumshoe spreadsheet linked from the sidebar).
The ad and a suggested solution were sent in by an anonymous sleuth, for which I’m very grateful. I didn’t see the full ad, but the email he forwarded had all the key information.
We begin with a tease about a major owner and investor: Jim Simons, a successful hedge fundie, was buying up shares of this company at about $14. Navellier claims to have recommended it at $12 (and just a quick hint: It’s back down near $12 again as I type this)
This tiny company of 144 employees in St. Paul, MN is working on something that has to do with diet and exercise — Navellier cites his great success with Nutrisystem (which is an interesting stock in its own right at the moment — check out that short interest and the cash flow), and says he thinks this company could be a quick double by the time the year is out.
So what does this company actually do?
A few weeks ago, they made an agreement with Garmin, the GPS folks, for a niche product that combines their metabolic program (or something like that) with GPS devices for hard-core runners. It gives some kind of guidance to help you through a training regimen.
I have no idea why this is different from anything else in the business, but we’ll take Navellier’s word that it’s somehow significant.
So essentially, the claim is that “this new weight-loss system should do even better [than Nutrisystem]—because the solution is based on personalized feedback as you go through your exercise routine.”
Interesting … and some specific clues that we can check?
Sales are growing at 53%
Earnings are up 550% “in the past 4 quarters”
Forward PE is 19
So what is the company that Navellier is calling “a screaming buy?” $1,000 a year to Emerging Growth will get you the answer … as will moving your eyes just a hair lower on the screen:
Angeion Corp (ANGN)
This is a company that primarily sells systems to track metabolic rates for medical and health professionals — the main product line is called MedGraphics, and the fitness stuff is a bit of a newer business for them. As far as I can tell from a cursory glance, their primary product looks like a laptop, I don’t know if their hardware is anything special or they’ve just got a unique software platform for tracking metabolic … stuff. Clearly, I’m out of my depth here. I don’t usually run very fast unless I’m being chased, and never with any electrodes hooked up to my body.
The fitness/weight loss line consists mainly of “metabolic training systems” that they sell to fitness centers and weight loss professionals, so the Garmin thing is really their first direct-to-consumer product that allows you to use a personal GPS device and the internet to do this tracking. I don’t know if they require you to have a professional involved as well, or not.
The numbers above also track, though they’re a little bit out of date — the forward PE, according to Yahoo Finance, is now down to about 13 (and the price down to about $12, as I noted above). They have been profitable for a while, and certainly there are a lot of us fatties around that could use some sort of product like this. I have no idea whether or not this new Garmin product will take off as Navellier believes, but I do have some measure of skepticism since it appears to be their first foray into this consumer-oriented side of the business (the stuff they sell to medical and fitness professionals is sold through a direct sales force, which is very different than selling direct to consumers … if that’s indeed what they’re aiming to do).
(Just as an aside: there is another small company we’ve noted lately that’s involved in remote monitoring of heart rates and such, though it seems more focused on health than on fitness — that’s the “too dangerous for NBC” teaser about the Cardio-Vest that we sniffed out a while back.)
Whether or not Angeion is going to make it big and double this year, well, that’s not my call. Navellier thinks so, and Jim Simon is apparently enthused as well, and I would certainly expect the two of them to be worlds smarter than your friendly neighborhood Gumshoe. Let us know if you’ve got an opinion on this one, and thanks to my reader for bringing this one in to the Gumshoe family!