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.