What is “The Almost Perfect Stock?”

Sleuthing out Navellier's latest "almost perfect" Emerging Growth teaser pick

By Travis Johnson, Stock Gumshoe, December 8, 2013

Irregulars Quick Take Paid members get a quick summary of the stocks teased and our thoughts here. Join as a Stock Gumshoe Irregular today (already a member? Log in)

This piece originally ran on November 18, when Louis first started touting this as a must buy “Almost Perfect” stock. Turns out, it was a prescient call this time around and the stock shot up after they raised their guidance when earnings came out late last week.

So what’s up now? I haven’t re-done my article below, but I thought I’d re-share it with you because Navellier is still sending out aggressive “Small cap buy alert” emails on this one after the guidance raise (the guidance went from $1.50 next year to $1.70-1.90), and he apparently likes it just as much at $35 (he’s now calling this same stock the “Almost perfect $35 Technology company”), and he thinks it will hit $50 in 2014 and make the best gains in the next three months. I saw the latest version of this come from Navellier on Saturday morning, with the hints and clues all the same and clearly teasing the same stock. I don’t know any more about it than I did three weeks ago when I originally covered the pick, but folks have been asking about the tease and the rest of it, beyond the new price, is the same — so what follows is our un-updated article, including the original chain of reader comments. Enjoy!

Louis Navellier has used a similar kind of pitch before, telling us that he’s got the “almost perfect stock” and will share it with you if you sign up for his newsletter — but this time around, the pick is different.

Which is probably a good thing — the last time around Navellier touted a much more expensive (overpriced, even), well-known large-cap stock as his “almost perfect stock” and it turned out to be VMWare (VMW), called “almost perfect in August 2010 when it was around $80 a share, then again “almost perfect” and “grab it now before it takes off again” in March of 2012 when it was around $100 a share. Now it’s right around $80 again, so it’s sure not the worst stock in the world (I’ve certainly had worse losses than that) … but “almost perfect” it ain’t.

Still, this one caught my eye because it’s more reasonably valued and it’s growing (growth is a prerequisite for Navellier picks), and because, unlike VMWare, it’s a small cap company and I actually hadn’t heard of it before. So what is it?

I don’t want to spoil the surprise, so lets just jump through the clues … here’s how he tantalizes us:

“Imagine … an integrated technology company whose products are not only found in virtually every Ford, Chrysler, Mazda, BMW, Mitsubishi, Nissan, Mazda, and Aston Martin sold around the world …

“… but also found in Electrolux dishwashers, KitchenAid refrigerators, and Jenn-Air wall ovens as well as locomotives, railcars, trains, construction, welding, and mining equipment …

“… a company whose revenues jumped 40% and whose earnings soared 250% last quarter—ALL while handing investors 159% 12-month gains.

“So what, exactly, is the flaw here?

“Ninety-nine out of 100 investors have never heard of this almost perfect $25 stock and yet its innovative user interface solutions are transforming the computing world just as Microsoft, Apple, and Intel did before it.”

Yes, if you’re paying close attention that bit about the “flaw” being that 99 out of 100 investors haven’t heard of the stock is exactly the same spiel he used with VMWare … though it’s probably closer to accurate this time around.

What else are we told about this “secret” stock by way of clues?

“… this company is the 800-lb gorilla of the touch and user interface technologies market—technologies that are now being integrated into virtually every electronic device on the planet…. innovative ‘turn on/off and control’ products in automobiles and home appliances, but also in …

  • Wind turbines
  • Solar panels
  • Electric and hybrid vehicles
  • Next-generation light rail
  • High-efficiency services
  • Fighter jet radar systems

“… Fortune 100 customer base including the likes of Boeing, General Motors, Nissan, Volkswagen, and Jaguar.

“Which is also why the company has registered FOUR positive earnings surprises in a row of 8.3%, 350%, 60%, and 71%.”

So … enough clues for you to toss the stock name out for us? No? OK, a couple more:

“… management has upped its earnings per share guidance from $.052 for 2013 to $1.50 for 2014…

“if you can add our $25 Almost Perfect Stock to your holdings before it declares earnings December 5th—and before the pension funds pile in—you could easily grab its next 100% gain by the end of the year.”

So what stock is this that Navellier says has one of his strongest buy ratings, market cap under a billion dollars, and a forward PE ratio of just 13? Thinkolator says he’s teasing and hinting about: Methode Electronics (MEI)

And no, it’s not the first name that comes to mind when you talk about touch screens and user interfaces — that’s probably Immersion (IMMR) or the smaller Synaptics (SYNA), both of which are focused on the much more visible business of touch screen controls for consumer electronics (though they’re also a competitor to at least some degree). Methode is largely a supplier to the automotive and broader transport sectors (including aviation, rail and other mass transit), and they sell a lot of stuff that’s not directly involved with the user interface — the center consoles in cars are a core product of theirs, with touch-sensitive controls and new switches and communications technologies, but they also sell a lot of power management equipment and behind-the-dashboard stuff by way of switches and controls and etc. and they have substantial businesses in data transmission, sensors, and the like. You can check out their latest investor presentation here to get a better idea of the kinds of businesses they’re in.

Here’s how they describe their market:

“We design, manufacture and market devices employing electrical, electronic, wireless, safety radio remote control, sensing and optical technologies to control and convey signals through sensors, interconnections and controls. Our business is managed on a segment basis, with those segments being Automotive, Interconnect, Power Products and Other. Our components are in the primary end markets of the automobile, computer, information processing and networking equipment, voice and data communication systems, consumer electronics, appliances, aerospace vehicles and industrial equipment industries.”

There are certainly other, much larger companies involved in these businesses too — like Johnson Controls (JCI) and Honeywell (HON) and Lear (LEA), though they all offer different kinds of products with different overlap, and most automobile manufacturers seem to end up working with pretty much every supplier to one degree or another, so I can’t tell you much about the competitive landscape based on my few minutes of research this morning.

But Methode is an interesting niche supplier, and they do have a decent valuation given their growth this year and their growth prospects — they trade for about 20X trailing earnings, about 13X forward earnings, with a 1%+ dividend, roughly the same valuation as the much larger Johnson Controls but with dramatically higher recent growth rates and a slightly higher growth forecast from analysts.

This is really where Navellier gets excited about a company, when they’re going through some kind of big burst of earnings and showing 100% or 200% earnings growth, with lots of analyst upgrades and earnings surprises (positive ones, of course) — and those kinds of momentum stocks are often extremely successful investments, particularly in bull markets and particularly when you can buy them at decent-looking prices … but they are also the kinds of situations where you can find yourself attracted to a stock because of a one-time growth spurt that makes you overestimate their future prospects.

So is the growth going to continue to shock us and drive the price higher? I don’t know, but they have been a remarkable story so far this year — in their last quarter they beat earnings expectations by 70% and raised their 2014 guidance by about 50%, so that’s why the stock jumped by about 30% in a day back in September, the third (and biggest) jump up this year following an earnings release (that’s fiscal year guidance — and we’re already in the second quarter of their 2014 fiscal year).

They have continued to get contract wins for center consoles, they produce the MyFord Touch console system and apparently are also going to be in the next wave of GM SUVs and just got another center console design with some unannounced partner for next year, so they appear to be doing quite well and also benefitting from the fact that Europe is recovering (or at least stabilizing) to join what has been a global boom for automobile makers in recent years. Whether that means they’re going to blow out earnings again when they announce their next quarter (for them this will be the second quarter of the 2014 fiscal year), I don’t know — I haven’t seen an official date for the next release but their quarter was announced on December 6 last year, so December 5 may be accurate.

And beyond that, well, I can say it looks interesting but I don’t know a lot about them or about their prospects — if you’ve spent any time taking a gander at Methode or their competitors or have an opinion to share, please shout it out with a comment below. Thanks!


Related Gumshoe Articles

Leave a Reply

51 Comments on "What is “The Almost Perfect Stock?”"

avatar

abe zieff
Guest
0
abe zieff
November 18, 2013 12:53 pm

I enjoy reading your analysis of touted Cos. Thanks I have a special Co. that I had years ago and it looks like it is coming back to life. fcel is the symbol. I bought it for 100 dollars and it split 2 for 1. I then sold it when it rose to 90 dollars. so I doubled my investment, Then it died And went back to pennies a share. Now it seems to be coming back to life, What do you think>>Abe

Skptk
Guest
0
Skptk
November 18, 2013 1:26 pm

OK, its almost perfect. Just the price is about ten x out of my penny stock range.
love the sleuthing humor.

David Brown
Guest
0
November 18, 2013 1:29 pm

Zacks has Methode Electronics (MEI) listed as a Strong Buy as well. They love small to midsize growth companies that have positive earnings surprises and rising growth. Given the relatively modest PE on this stock, it is certainly worth a close look. I’m not sure about almost perfect, but it does look like a solid pick this time from Mr. Navellier.

Dave
Guest
0
Dave
November 18, 2013 2:55 pm

I figured this one out too and actually posted part of his tease on Yahoo under the MEI message board…and I bought a small number of shares as the company had some recent insider buys (as well)

Ramesh
Guest
0
Ramesh
November 18, 2013 3:05 pm

@David
Hmm. Looks like Zacks opinion on MEI is “Hold”. http://www.zacks.com/stock/quote/MEI?q=MEI

Mark Krupka
Guest
0
Mark Krupka
November 18, 2013 3:15 pm

I have found Navelliers picks over the years to be pretty worthwhile. I do like your reviews of them, and am surprised that he is resorting to this type of sensational marketing. I will say that I made a 32% return in one week when he said to buy Santara (SNTS) by Friday night a few weeks ago. It hadn’t been on my radar screen until that point. I bought 250 shares at $23 and change and sold at just over $32. I was going to buy 500 shares. Wish I had.

David Brown
Guest
0
November 18, 2013 3:50 pm

Sorry Ramesh, you are correct. MEI had been a strong buy with Zacks in Sept and October but they downgraded it on Nov. 1. I guess they don’t see it as almost perfect after its recent run up.

Lisa
Guest
0
November 18, 2013 4:07 pm

Last teaser Navellier put out got bought out for a 35% all-cash premium in 13 trading days. Stock was Santarus, symbol SNTS. Not saying lightning will strike twice, but I would not count out Navellier’s teasers. And because Stock Gumshoe figured it out, I made a nice profit, and will now join the Irregulars–many thanks, Travis!!

Mike
Guest
0
Mike
November 18, 2013 7:27 pm

Why would anyone want an almost perfect stock when they can by one that is more than perfect? In fact it is a budding blockbuster IMHO
I bought is just over a month ago at .06 and today it closed at .24. I am adding more and will hold for at least 1.00. The name? Signa Labs ( SGLB) I wonder why no one knows about this except maybe people in the Know? What do you think gumshoe?

bobmugge
Member
0
bobmugge
November 18, 2013 7:59 pm

I have done well with Navellier and got smoke several times too. He burned me with SMSI, and some Hebrew National Grocery Store who I forget the name of. However he won big for me with Apple when it was 65 a share that I still own as well as Hansen HANS, SNTS recently. He is pretty good. Better than most.

Lisa
Guest
0
November 18, 2013 8:58 pm

Hey, Mike! I’m curious–what’s so special about SGLB?

LostOkie
Irregular
112
LostOkie
November 19, 2013 12:13 am

I gotta say I don’t know what’s so special about it, but take a look at it’s 6 month chart, which is the longest yahoo shows on it. I bought it at 3 cents on Aug 1. I’m up over 470% in less than 4 months. It’s turning into the best investment I’ve ever made.
KNOCK ON WOOD!! LOL
Having said this, maybe I should now consider selling a portion!

Elliot Sedlecky
Guest
0
Elliot Sedlecky
November 19, 2013 8:16 am

see my reply below. Sorry, should have replied to this one.

virleon
Guest
0
virleon
December 9, 2013 4:04 pm

I’ve noticed that MSN Money sometimes gives a much longer price history than Yahoo does, as is the case for SGLB . Anyone have any idea why this is so? (I greatly prefer Yahoo Fiances’s format though.)

koogle
Irregular
0
koogle
December 4, 2013 3:06 am

Nick to see SGLB get a mention, i’m a big fan
Lisa you can see more on this blog
http://sigmalabs3dam.blogspot.hk/

Ron Homan
Guest
0
Ron Homan
November 18, 2013 10:02 pm

I don’t know about this company, but as one who has had to pay through the nose to replace electronic controls on dishwashers, garage door openers, and air conditioners I think there is a lot to be said for the old way of controlling things. The days of the 20 year old appliance are, alas, no more. Good for the appliance makers and the electronic controller company. And soon I suppose for auto mechanics. Looks like the only way for us to come out even is to buy MEI and hope Louie is right.

ejay
Member
0
ejay
November 19, 2013 1:23 am

looks like everyone who bought whatever is pushing there u nm it so others can jump in behind. guess i cant beat u so i am joining the horse race with my buys. HOTTIES beer distributor in town dkam .0059 due diligence

Elliot Sedlecky
Guest
0
Elliot Sedlecky
November 19, 2013 8:15 am
Regarding Sigma Labs, I am also a shareholder with an average purchase price of $0.05. Unfortunately, I am a very small investor … wish I had many more shares. But it seems the sky is the limit with this company. Their main claim to fame is their IPQA technology for 3D printing. Basically, they provide a means for examining parts in real time as they are being made and predicting where failures of shape may occur. This is a huge time saving and cost saving method. They are also developing their own 3D printer with Interactive Machines. They have contracts… Read more »
crsemus
Member
0
November 19, 2013 1:45 pm

Lou James just touted a “small, well run mining company”; presumably gold–Any ideas, anyone??

dale1935
Irregular
0
dale1935
November 19, 2013 1:14 pm

Looks like a lot of people are reading this, MEI has had 2 up days!

Gary
Guest
0
Gary
November 19, 2013 5:56 pm

Zacks Home Run Trader added MEI to their long portfolio on 4-8-13 at $12.97 a share. It is up over 103% since it was added. It is still long in the portfolio. Zacks Ranks are based somewhat on upgraded earnings releases. It was a #1 in April, but has been downgraded to a #3 as there haven’t been any recent upgrades.

jdhalebian
Irregular
0
jdhalebian
December 5, 2013 12:37 pm

Pefect bounce today.

jdhalebian
Irregular
0
jdhalebian
December 5, 2013 12:38 pm

Perfect bounce today.

jakeblues
Irregular
0
jakeblues
December 5, 2013 3:14 pm

Pretty happy I bought this one. 🙂

Now to continue to hold or sell….

stockview
Irregular
0
stockview
December 5, 2013 10:36 pm

Great, two for two on NAVELLIER … you go Navellier!
Thanks Gumshoe

hunkado
Member
0
hunkado
December 6, 2013 12:03 am

Sell 50% and reserve for the next?

Dave
Guest
0
Dave
December 9, 2013 11:33 am

Funny it traded down prior to earnings as if there had been a nasty leak but then boom up as earnings were very good. Louie now has adjusted his price target to $50

Jerry
Guest
0
Jerry
December 9, 2013 12:16 pm

The stock peaked at about $52 in early 2000! So maybe Navellier does not think it will break it’s old high??

Lisa
Guest
0
December 9, 2013 6:08 pm

The bubble burst on March 10, 2000. All stocks went down. If MEI is growing, it should be able to take out its 2000 high with relative ease. However, Navellier expects most of the stock appreciation to occur in the first few months of 2014.

I sold half after earnings, and let the other half ride, with a $50 pending sell order.

chuckmva
Irregular
0
chuckmva
December 9, 2013 3:41 pm
I saw the MEI write-up on Stock Gumshoe and somewhere else that slips my mind. I decided to bite on it as an options play. First Round Elliot wave pattern ‘looked like’ the correction for the September rise was completed and that another wave up was beginning. I bought calls. 11/18/13 2:35 PM EST Buy 10 MEI Jan 18 ’14 $25 Call Executed @ $2.95 11/26/13 11:49 AM EST Sell 10 MEI Jan 18 ’14 $25 Call Executed @ $4.19 about a 40% profit End Round one, begin round two. Here I thought a fiver up was completing and thought… Read more »
Jon Cordova
Guest
0
Jon Cordova
December 9, 2013 4:41 pm

I bought 1 $25 dollar call on Nov 27 then sold on the 5th when it bounced after earnings. Total profit was $550 on a 200 dollar investment. Wish I would have held a bit longer would have been another $400 dollars. Thanks!

MonV
Guest
0
MonV
December 9, 2013 4:59 pm

Navelier has always touted good (high priced) stocks. Problem usually is that the stock has already gone up before he touts it.

Harley
Guest
0
Harley
December 10, 2013 11:49 am

I received pitch today for Louis Basenese and Wall St Daily for their MicroCap Tech Trader stock recommendations. He mentions he has a company by the 1st of the year will corner the tech market. ]
Any Ideas Travis?

Lisa
Guest
0
December 10, 2013 12:12 pm

Harley,

If you can copy and send to Travis, his “Thinkolator” might be able to figure it out. I’d like to know what it is, too!

Lisa

johnlklein
Member
0
johnlklein
December 10, 2013 2:48 pm

I beleive it’s Clearsign (CLIR)..

Harley
Guest
0
Harley
December 10, 2013 3:56 pm

Thanks

Slick Rick
Guest
0
Slick Rick
December 15, 2013 4:01 pm

Thank You John Klein ! If CLIR is actually The MicrCap Tech Trader Tease , you just saved us all $1695 or the cost of the service! http://finviz.com/quote.ashx?t=clir&ty=c&ta=1&p=d

David Brown
Guest
0
December 16, 2013 1:24 pm
CLIR is the one from Lou B. so take the saved $1,695 and invest it in CLIR as this one is ready to take off in 2014. In fact here are two microcap tech trades poised to take off in 2014: NTCXF and CLIR. Each has great recent real world data using company technology that shows considerable savings as opposed to current technology. NTCXF in solar and CLIR in flame based combustion. Each one of these companies will be making the news in 2014 with revenue producing deals, you heard it here first! You can invest $700 in each company… Read more »
Lisa
Guest
0
December 16, 2013 2:15 pm

Thanks, David! I’ll take a stab at these two picks. I won’t again take a Basenese pick, as many of us got burned with his IWSY pick. I am finding that Gumshoe’s followers are better informed than Lou B. any day of the week!

David Brown
Guest
0
December 16, 2013 3:46 pm

Good luck with NTCXF and CLIR Lisa. If I’m wrong at least you have company! These are two of my largest holdings so I put my money where my mouth is. SBOTF is my other big microcap in the biotech world. Stellar Biotech is likely quite a bit further away from profitability than the other two, but my oh my the upside potential of Stellar is massive–see the “tulip bulb” thread on this site for a lot of discussion on SBOTF.

2sheps
Member
0
2sheps
December 16, 2013 8:40 pm

Hi, David. What do you think is a good entry point for SBOTF? Don’t they do something with snails? I picked up some NTCXF today, and have a buy in for CLIR at $8. I’m not sure what a “tulip bulb” thread is, so I couldn’t quite follow your suggestion to learn more about it. Lisa

John Wallace
Guest
0
John Wallace
February 7, 2014 4:00 pm

Hi,
Any new thoughts or comments regarding Methode Electronics (MEI)? Looking for an entry point. Earnings to be announced on 2/27.
Thanks,
John

Lisa
Guest
0
February 9, 2014 8:46 pm
All I can say is that he is promoting it again. Just got his latest teaser where he’s trying to sell a bundled package of all his various newsletters for one very big price, and he is using MEI as his tease. He doesn’t mention it by name, of course–you have to buy his promition in order for him to reveal the stock. However, he is using the exact same language about his “pick” as he did when promoting it in the past, except for one thing–he’s now saying it should hit $50 “within the next two quarters”, so his… Read more »
5hau9
Irregular
0
5hau9
February 26, 2014 4:29 am

Hi Travis,
Have you any ideas about Lou Betancourt – Street Authority Insider – three small companies in the ” World’s First Trillion $ Boomtown” — Nat Gas, Gold, Oil, ??

Rgds. John

Mike Knapp
Guest
0
Mike Knapp
March 2, 2014 8:18 pm

I hope to learn about this one, too, Travis!

Mike Knapp
Guest
0
Mike Knapp
March 2, 2014 8:24 pm

P.S. – Did a little looking. Check out British Columbia’s “Montney Shale” gas play – this *may* be it. Good luck!

Mike Knapp
Guest
0
Mike Knapp
March 3, 2014 12:48 am

One more post! Here is a good place to start:
http://www.energyandcapital.com/articles/montney-shale-stocks/3724

Both ECA and TLM are probably good plays here. Both are noteworthy, ECA for its terrific fundamentals, and TLM because it is one of Carl Icahn’s picks for 2014. I am already in ECA for their strength, and am currently researching TLM. Again, good luck!

Mike Knapp
Guest
0
Mike Knapp
March 3, 2014 2:23 pm

Last post, I promise. I found it! Check here for a starting point:

http://www.huffingtonpost.ca/2013/06/11/lng-bc-petronas-port-edward-facility-pipeline_n_3419902.html

5hau9
Irregular
0
5hau9
March 4, 2014 2:21 am

Thanks Mike , I got to Kitimat / Huffington – interested in Gumshoe’s take

rjcrot84
Member
3
rjcrot84
April 8, 2014 11:56 am

MEI has backed up to $28.14 today. I don’t seen anything on Yahoo that would indicate any material changes in the company’s revenue or earnings. MEI has just been hammered recently along with other tech stocks. PE is moderate. Might this be a good time to jump in the water?

wpDiscuz