Navellier’s Presidential Winner?

By Travis Johnson, Stock Gumshoe, October 10, 2008

In the few days preceding the last presidential debate between McCain and Obama (which was soooo boring … I was really hoping for more winking, personally), Louis Navellier continued his presidential-themed teaser ad campaigns.

Last time around, he was promising that he had written the perfect campaign speech, and that whoever uttered it would be the winner of the election — that was about natural gas transportation systems, for the company Fuel Systems Solutions (FSYS) — you can read about it here if you like, the stock has been clobbered along with almost all of its compatriots in this alternative fuel niche (down from $50 to $30 or so in recent weeks — right now it’s right about where it was when Navellier started promising a double over the Summer).

But this time, though the theme is similar the stock is different. He’s advertising his Emerging Growth newsletter, and calling this the “most obvious way to double your money.” That’s almost a crazy prediction now, and was still pretty out there as of a week ago when I first started seeing these. Heck, the S&P 500 could double or halve in the next month and I’m not sure I’d bat an eye at this point, but still, promising a double is awfully aggressive during a steep bear market.

He breaks down the stock for both parties:

“Two Reasons Why Obama Loves This Stock

“The company’s filtration systems convert greenhouse gases like nitrogen oxide into harmless nitrogen and water.

“In fact, utility plants in the U.S. already use this company’s equipment to generate 50,000 MW of energy, helping to prevent acid rain, smog, water-quality deterioration and climate change.”

and, for equal time …

“Two Reasons Why McCain Loves This Stock

“The company’s filtration systems serve power producers, refineries and gas transmission companies.

“These filtration systems not only clean emissions from power plants and chemical companies but also make the refineries and drillers run more efficiently—adding to bottom-line profits.”

He also provides a few quick clues about the company …

“Because this company is the world leader in pollution control for the energy industry.

“With both candidates’ energy plans containing some form of pollution control, you can’t help but make money when you own this stock.

“And the company’s one-year 992% earnings-per-share growth proves you can profit BIG-TIME from NEW drilling and/or NEW green energy legislation.”

So … what are we dealing with here?

Well, danged if I can find the precise quarter in which they reported exactly 992% earnings growth, but since you can make up just about whatever numbers you like and call them “earnings” it’s probably in there somewhere, ex items or something. This company must be …

Peerless Manufacturing, now called just PMFG, Inc. (PMFG)

This has made it on Navellier’s lists in the past, and it is used by plants that generate more than 50,000 MW, as per the company website. The last quarter’s report, which also explains how Peerless has been absorbed by PMFG, the parent, tells us that they are growing … but 992% is nowhere to be found. They have had earnings growth of near 700% in quarters past, so there’s probably a tricky 992 hiding somewhere in those numbers.

The shares are currently hitting 52 week lows, though it showed a really pretty long term growth chart … until it hit $30 late in the Summer. That was the peak, and it has since fallen to under $10. Ouch. Like so many other companies, the shares are right back about where they were a year ago (actually, that’s better than many other companies).

I can’t guarantee that this is the company Navellier is talking about — it matches the clues, and it does claim to be a leader in these filtration technologies, and does all the things teased in the ad. It’s also a tiny company, market cap of well under $200 million at this point. Despite the high flying chart of the past few years (if you ignore the last couple weeks), this is no flash-in-the-pan energy tech company, they’ve been around for about 75 years.

Here’s how the company describes their business:

“Peerless is an experienced, reliable and global leader, designing and supplying a wide range of compact, high efficiency filtration and separation equipment and environmental systems for the reduction of air pollution. We serve the energy industry around the world, including gas and oil production, petrochemical processing, and power generating facilities.”

Valuation-wise, the PE ratio on trailing earnings is about 15. I wouldn’t put any stock in forward earnings estimates at this point, since analysts seem not to have crystal balls that are any better than yours or mine in this environment, but the analysts think this one has a forward PE of 7. That used to be cheap, remember? If that comes true and the company shows the ability to continue this kind of rapid sales growth, buying it here may be a steal. Big IF.

So … do you think Peerless stands above the rest? Is this little filtration services company going to be a big winner, or should much larger firms that have similar valuations perform better? Or do you have a better idea for this Navellier teaser that the Gumshoe missed (my success rate, I should remind you, is only 99)

No, I’m not going to answer, this market continues to make me feel more stupid every day, and I don’t wish to add fuel to the fire — I’ll let that hang out there as a question for you.


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13 Comments on "Navellier’s Presidential Winner?"

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farley 5
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farley 5
October 10, 2008 2:29 pm

January ’07 lows were around $6 so you may want to pick up some there.

Peter Mac Isaac
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Peter Mac Isaac
October 10, 2008 4:02 pm
Travis- It appears the lack of common sense in the general population has seriously leaked over into the investment arena as well. The internet has leveled the playing field but has obviously let the fifth string players of which there are 10,000 to every one front line player onto the field with the professionals with the result being calamity backed by insanity. It would all be hilarious if not such a travesty. It appears that most folks don’t know that they don’t know but they think they know. You however have refreshingly acknowledged you like me just don’t know any… Read more »
gca
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gca
October 10, 2008 5:26 pm

I feel like a kid in a candy shop, there are sooooo
many goodies out there.
Really value the quality of work you do. Thank you.

Rex Moore
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Rex Moore
October 10, 2008 11:10 pm
I subscribed to several of L. Navellier’s Letters keepingtrack of the M-B-G (money back guarantee) periods. Cancelled all. Have noticed inconsistency between Letters and ads. Letter updates and “Flash Alerts” will advise hold a steady course and make a few adjustments. Ads plead the worst is coming and HE can protect your assets with “always” just the right stocks set to doule, triple or whatever. I also found that most of his recomendations were, to me higher priced stocks with high P/E’s. When I ran some of them by my ML borker he was not impressed or enthusiastic about them.… Read more »
A. Nony Mouse
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A. Nony Mouse
October 11, 2008 12:08 am

I think you are spot on with this. It currently rates a “B” or Buy rating in his portfolio grader, however, this week is the first time it has not received an “A”or strong buy from him, all year.

CarlAzzeglio
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October 11, 2008 6:04 am

Navellier is currently down:

47% on FSYS
28% on PMFG

FSYS history here:

http://investorcrap.blogspot.com/search/label/FSYS

I know it is not as good as the StockGumShoe but please visit my blog. Cheers.

Diane E
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Diane E
October 11, 2008 11:47 am
Carl, I went to your blog and must admit, it was an eye opener for me because I purchased Navelliier’s Blue Chip Growth as things were beginning to fall apart. I had a fairly sizeable stash of cash I could have put in the market, and I almost followed his advice when he said to make sure you took advantage of the great buys and were full vestetd by the end of last March. But now, I can see where I would be in sorry shape if I had done that–though he did warn us not to touch the financials.… Read more »
Sam
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Sam
October 12, 2008 7:59 am
Interesting, Diane. I subscribed to Blue Chip 2 months ago after following the Portfolio Grader and his general Newsletter for a while. I understand the need to pump in the flash alerts to get more subscribers but would had to think Portfolio Grader is rigged to feed the subsciber pipeline also. I’ve bought As that have gone to Cs in the period of 4 months, but have chalked all that up to the general mess we’re in now. Can anyone offer any pros/cons on the Navallier System? I basically like the format and would like to follow it…..if it works… Read more »
sox
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sox
October 13, 2008 12:24 am

Sam
Most stock services are long only propositions. We are in a DOWN market. All these services lose subscribers because they follow their buy buy buy mentality when the market is going down the tubes.
We might get a rally here, it might last a few weeks and then will go down again. His system is good as far as grading stocks in a bull market. Just wait 6-12 months or until we get another bull market.

bill
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bill
October 18, 2008 4:28 pm
Following Navellier’s advise of Buy-Buy-Buy since early in the Spring (when I subscribed to Blue Chip Growth), and his advise to hold on as the market went down thousands of points, has now cost me over 50% of myportfolio worth–this, on his theory that good earnings, plus the fact we are in an election year would send his stock picks to a screaming high. In his weekly letters, and on his site, he still toots his horn about past glories. The man is NO stock market guru, if he had any real smarts he would have had his investors out… Read more »
Glenn
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Glenn
October 11, 2008 12:32 pm

Be careful when options trading; it requires a strong stomach and attention but they can be used as a great hedge to large positions. I like the spreads myself when going long but in this market often long is wrong.

susie
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susie
October 13, 2008 11:12 am

I subscribed to l. Navellier’s letter and bought mos which tanked 40% the next day. He needs to be exterminated. His picks are not good.

Clint
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Clint
October 13, 2008 2:02 pm
I started my trial period with Navellier back in March. I could not believe that he kept saying “Buy, buy, buy” with all the negative signals. So instead of buying and being fully invested, I set up a fake portfolio of what I might have bought per his recommendations. As of Friday, I was down 40%. I must admit I did purchase a few of the suggestions and they are down as badly. While you can’t blame Mechel on him (Putin had a big hand in that debacle), the constant pushing into a market that is heading downward is irresponsible.… Read more »
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