“$6 Canadian Oil Stock to $12 by Friday”

By Travis Johnson, Stock Gumshoe, June 11, 2008

This is another one from Louis Navellier, this time for his Global Growth newsletter — he’s going out on a bit of a limb with this one, saying that the stock will double in less than a week …

“All thanks to its mammoth Colombian, Argentinean, and Peruvian reserves. Buy this one today and I guarantee you’ll thank me a thousand times on June 13—or you won’t pay a dime.”

So … will he be right? And which stock are we talking about here?

Let’s go backwards, and talk for a sec about whether or not he will be right. This is a popular advertising ploy, promising dramatic short term performance, then saying that if they’re wrong and you’re dissatisfied, you get your money back.

Of course, they also know that once you subscribe to something, you’re (if you’re like most people) going to believe that it’s successful, at least in the near term — to ask for your money back is both a distasteful task for most folks, and an admission that you’ve ordered something you didn’t really want. Most people don’t do it.

And on the other side, Navellier’s marketing folks know that their marginal cost to send an email to each new member is almost nothing — if you do sign up based on this ad, then cancel your subscription and get your money back, they haven’t lost much. It doesn’t cost them any more to pay Louis and his researchers for 10,001 subscribers than it did to pay them to write to 10,000. And once you’re in the door, they’ve got a chance to impress you with the rest of the product, and show you the current picks that are making money, which means there’s at least a decent chance you’re going to stick around for a while as a paying subscriber even if their short-term promise of a double in this particular stock doesn’t come through.

So it’s hard for Navellier’s folks to lose in this situation, right or wrong.

Which doesn’t mean that this won’t be an interesting stock, nor that it won’t really double (anything can happen, after all) … just that I doubt they’re really looking at this as a huge bet on their part that the stock will perform as touted, even though they probably really believe it has a chance to do so. It’s primarily an advertising technique.

Now that we’ve got that out of the way … what’s the stock? I’m assuming you still want to know about that, yes?

OK, we get a few clues, aside from the fact that it’s a $6 stock that Naveller tells us he thinks will double by Friday (that’s this Friday, not next Friday, since the email’s been around for a few days).

They’ve got those oil reserves in Colombia, Argentina, and Peru. (Navellier mentions that these are the US-friendly countries South of the border, unlike Venezuela or Ecuador. I would say that’s maybe becoming a bit more arguable, particularly with Peru and Argentina, but they’re certainly friendlier than Chavez’s Venezuela.)

Here are the other clues we get:

“What’s more, this company’s quarterly revenue is exploding twice as fast as the big oil companies’—at an amazing 373% year over year! So it’s no surprise the stock is up a shocking 478% over the past 12 months.

“PLUS, with analysts now estimating the company’s sales growth to exceed 710% for the current quarter, you could easily expect a double in the next 14 days as the pension funds and oil and energy funds realign their holdings to improve their second-quarter performance.”

This is certainly a more timely newsletter ad than the last one we looked at from Navellier, since it is quite rare that the predictions will be as immediate as “a double in 14 days, guaranteed” … but does that mean it will happen?

Navellier says that this stock is already up 60% in the last month, and has doubled in the last 90 days. More clues, yippee!

So … ready to plop down $5,000 for a subscription to find out the name of the stock?

That’s an exaggeration, actually — apparently this one is “on sale” again for $699 for three months. Still not chump change, of course. Or if it is, I’d like to hang out with that chump.

So what is the company? Impatience grows!

“Rising oil prices will catapult this Canadian oil stock from $6 to $12 in the next 14 days without or without you. The best time to buy it is now—before it reports next quarter’s earnings.”

OK, that’s all we get in the way of clues. Some folks have already hazarded a few guesses on this one in the forums and on some earlier comments on the site, so let’s see if they’re right … a few moments on “liquefy” in the Thinkolator and we learn that Louis is promising a double in …

Gran Tierra Energy (GTE in both NY and Toronto)

Not sure what he’s talking about with that “get in before the quarter is reported” business — they’re on a calendar quarter, so they won’t be reporting the June quarter for quite some time … they just reported their last earnings on May 12. So you’ve got plenty of time before the next earnings release if that’s what you want to wait for.

It was at about $6 when this email started circulating last week — and as you might imagine, given the emailing heft of Navellier’s publishers, it has gone up a bit. Certainly we’re far from a double so far, so you’ve still got some time if you accept the premise — it’s just under $7 right now, you’ve got two days to see if it’s going to get to $12 before Navellier’s deadline.

If you don’t subscribe to Global Growth, however, I expect Navellier won’t give you anything if he’s wrong — and whether you’re an Irregular or not, I make no promises about the prospects of Gran Tierra and won’t be paying you, either. Sorry, you’ve got to figure out on your own whether it’s worth an investment.

So what do we know about Gran Tierra, other than the fact that analysts really are predicting 710% sales growth for this next quarter?

Well, they are a new company — formed just a few years ago, with mergers and add-on acquisitions used to build up their reserve and exploration portfolio in South America. They don’t have any debt as far as I can tell (they have a facility, but it doesn’t look like they’ve used it yet), though they’ve done a fair amount of capital raising over the last few years.

They did double their reserves last year over 2006, so that’s quite promising, and they’ve announced that they’ll be doing a reserves audit at the end of June, probably to be followed at some point by an updated number — and the number will probably go up, since they’re continuing to make new discoveries and book reserves as new wells are completed, particularly in Colombia most recently.

And their earnings have been growing like gangbusters, albeit from a very low level — they’ve been profitable for less than a year, and those first quarters of earnings alway show up as massive percentage moves. They’re still trading at a huge multiple to current earnings, you’re really betting on their growth continuing to come through if you buy today — trailing PE is about 250, but forward PE comes all the way down to 13 if the analysts are correct. So far, the few analysts who made quarterly predictions for the last couple quarters have been proven a bit too optimistic, but there have been some shut-in production problems and some “one time” expenses that have hurt earnings a bit lately, which can easily crush the estimates when the raw numbers for earnings are so teeny.

Louis tells us that “you could easily expect a double in the next 14 days as the pension funds and oil and energy funds realign their holdings to improve their second-quarter performance” … so essentially, the short term bet is that because they are continuing to pump oil at higher and higher prices, and because more production is expected to come on line before too long, the institutional investors will be jumping on board now to get it on their books before the end of the quarter.

I suppose that’s feasible, but it seems a little thin as a rationale for a stock doubling. I’m more convinced by the momentum in the share price, which clearly shows a rising level of awareness of this stock, and, more importantly, by the rapid growth in earnings and revenues that we’re expecting. Of course, “expecting” is a loaded word, but it does seem like Gran Tierra is perhaps at an inflection point with the potential to grow into a fairly impressive oil producer, especially if oil prices remain so ridiculously high. What do you think?

Global Growth, by the way, is one of Navellier’s newer newsletters and is not covered by Hulbert, so I don’t know what the long term performance has been — Navellier has for years produced one very good momentum-growth newsletter called Blue Chip Growth, but his Emerging Growth newsletter, for one, has performed much less well. I would guess that Global Growth has performed well lately (last two or three years), given the market climate, but I don’t know.

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32 Comments on "“$6 Canadian Oil Stock to $12 by Friday”"

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Axxell
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Axxell
June 11, 2008 3:21 pm

Canadian B.N.N. has been sending smoke signals on this one…It’s starting to make noise….But among many others, so…

themayor
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themayor
June 12, 2008 11:19 am

This is a potential winner here……Downgraded from outperform ..to perform a couple days ago by sombody…..can’t think of their name……BUT with oil heading NORTH and good Fundamentals….I just BOUGHT some at $ 6.75………Let’s GO !!!

SageNot
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SageNot
June 12, 2008 11:30 am

http://finance.yahoo.com/q/ta?s=GTE

There isn’t a dept. store that sells hats that would fit Louie’s dome, he’s that egotistical. I’ve known him as a past subscriber since the ’80’s, just after he split with Jim Collins.

Back then Louie was a Wall St. whiz kid, but none of my old Wall st. buddies subscribe to his letters anymore. Just look at how LATE he is with this GTE pick. Too late for my tastes, any decent momentum advisor gets you into their gems much sooner, Louie has t/b despearate for subs.

GLTA!

Blurpie
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Blurpie
June 12, 2008 11:45 am

So, since Louis gives all these talks around the country; doesn’t he get criticized for his overhyped letters at these events? How does he respond to those?

Gravity Switch
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June 12, 2008 12:05 pm
In person Navellier is actually extremely reserved compared to most of the newsletter guys. If you see him at a conference next to, for example, Tobin Smith, Navellier will fade into the background until you can barely see him. And I think probably every single one of these guys gets pestered about their over-the-top ads now and again, and they pretty much always say, “that’s just the marketing to get you in the door so you can see how fabulous I am for yourself.” He’s very much got the persona of a numbers geek, though of course his services get… Read more »
Tom T
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Tom T
June 12, 2008 1:41 pm
I bought GTE a few weeks ago when they announced their discovery in Columbia, paid about $4. The well test was >6000 bbl/day. This is pretty good stuff even if oil were not north of $100/bbl. Their propoerties in Argentina are producing small quanities but they are planning on doing some more drilling. The property in Peru is not going to be developed for quite some time depending of the success of the exportation. I don’t know about Navellier’s prediction of $12 by next week but They could definately be there in the next year. In my opinion, this is… Read more »
Byron Mullen
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Byron Mullen
June 12, 2008 2:31 pm

I certainly hope it goes to $12 even if it takes several Fridays. Bought it some time ago.

Ted
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Ted
June 12, 2008 4:18 pm

Hi. Since I found this site I have a question that I have not found a good answer. If this is so great why do they need my money. Why not just invest in the stock and make a bundle. That is the question I always ask when I see these 100% increase in value stocks.

Gravity Switch
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June 12, 2008 4:28 pm
It’s a good question — but it’s so much more profitable to let other people invest with their own money, and keep their subscription fees either way. I imagine some of these guys do think about the idea of going off on their own to invest their own money, or start a hedge fund, instead of running an investment advisory or newsletter … but that’s also a route to higher blood pressure and a more severe make-or-break existence for many. It takes all kinds, and it’s certainly (on average) a less risky and steadier business to be an advisor than… Read more »
Bob
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Bob
June 12, 2008 5:00 pm

The only problem that I can see with Gumshoe is that there is no way to get a quick response if you need one to know where t put your money in the short term. For instance, this one that I’ve been asking for ages about. If ANYONE out there can give me a clue as to this company, I’d be very grateful.

http://www.isecureonline.com/Reports/MSS/EMSSJ402/?o=1468078&u=18378631&l=846393

Thanks,
Bob Coffey

Gravity Switch
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June 12, 2008 5:35 pm

Hi Bob — that “Blue Gold” teaser ad has been around for a year or so, the stocks are Hyflux, Lindsay, Gordon-Rupp, Kurita, and Nalco. Most are up quite a bit from where he first touted them, but might still be interesting if you like the long-term water story. I’ve written about Hyflux a few times, but don’t think I’ve covered the others in any detail. I imagine this also got batted around at the Forum quite a bit, but I don’t recall specificall and haven’t checked.

Max Value
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Max Value
June 12, 2008 5:53 pm

Hey Bob, if you search for “Fortune magazine calls it “the oil of the 21st century.””, you find WATER. If you search Stock Gumshoe for WATER, you find Hyflux and the rest.

Henry Samuels
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Henry Samuels
June 12, 2008 8:27 pm

I have asked about the company touting a battery that lasts forever without charging and can be used in almost any mechanism which uses a battery. What is the name of this company?

Gravity Switch
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June 12, 2008 9:13 pm

XDSL is the “forever batter” teaser stock — enter that in the search box and the article should come up.

SageNot
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SageNot
June 12, 2008 9:14 pm
Tobin Smith Gumshoe? I’d think that Louie w/b in a huffy fit t/b compared to Tobin smith. I really didn’t want to spill a little soot on Louie, but it’s no secret that he had a managed acct. deal with AG Edwards, & in the early part of this century. Well a widowed neighbor of ours lost over 60% of her acct. when the manager used Louie’s conservative system & wouldn’t settle with her. She asked me if I could help & I went into AG edwards with her & simply asked why she wasn’t given the “arbitration’ forms. She… Read more »
Gravity Switch
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June 12, 2008 9:19 pm
Thanks Sage. Tobin and Louis work for the same publisher, they’re often at conference together … at the booth you can sometimes see Louis in the corner chatting with one or two subscribers, while Toby is in the Hotel lobby telling a tall tale at the top of his lungs with a crowd of dozens surrounding him. Some colorful folks in this business. I’ve heard anecdotally about some poor performance in Louis’ managed accounts-type products, too, though I don’t know if my anecdotes mean anything, and certainly his mutual funds have not exactly set the world afire — his newsletter… Read more »
SageNot
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SageNot
June 12, 2008 10:20 pm

Well management fees avg. 4% + what the brokerage firm charges per trade. My personal time with Louie ended with a trip to Lake Tahoe & his Incline village offices. Let’s just say that Louie has his moments, while I’m a more consistant personality. It was many years ago & maybe Louie has mellowed out some since.

Didn’t mean to get so personal about the matter.

Stan
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Stan
June 12, 2008 10:30 pm
I have subscribed to Global Growth twice – for just short 3 month periods. Both times, I had some great results. I have had more quick-rising stock picks from his service than any other; and I have tried over 25 services. I understand that Navellier’s Quantum Growth service has performed the best and Global Growth has performed second best. Both performed substantially better than Blue Chip Growth, which I subscribe to now. The Global Growth only has about 25 to 30 stocks in the portfolio at any one time; versus Blue Chip having many, many more. Based on what you… Read more »
jon
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jon
June 13, 2008 8:01 am

Gran Tierra Energy Successfully Drills Costayaco-4 in Colombia, Completion and Testing Operations Initiated

http://www.stockhouse.com/News/CanadianReleasesDetail.aspx?n=6937891

Blurpie
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Blurpie
June 13, 2008 8:52 am

Well, it’s not as if he makes it a secret: http://navelliergrowth.investorplace.com/stock-of-the-week/archive/Gran-Tierra-Energy-6-9-08/GTE.html
So you can pick up at least one of his stocks each week and start following it yourself!

Blurpie
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Blurpie
June 13, 2008 11:33 am

To Gumshoe: Louis explains why his newsletters have a better performance than this mutual funds: In some of his letters he said for his funds, he’s limited to how much focus he can place on a single sector (e.g. he can’t go completely into energy stocks, and he *has* to include some financials) due to regulation (the idea being the diversification products your average Joe investors). He says that the way his newsletters are balanced (heavily overweight on oil exploration e.g. or agriculture), he could never do that with his funds (again, due to regulatory restraints).

Blurpie
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Blurpie
June 13, 2008 5:31 pm

Okay, here’s the official score fellows: GTE closed at 7.01 (7.00 in after hours trading). Oh darn, anybody ask for a refund yet? 🙂
Actually, this brings up another interesting question: a lot of these services *are* honest and they *will* give you a refund if you ask for it because of unfullfilled promised. But if they have to give back all that money (because rarely do the promises ever work out), how do they actually *make* money? Do they just live of the interest while the money sits in their accounts before they have to give it back?

joe cruz
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joe cruz
June 14, 2008 6:53 pm

I bought Gte from a newsletter i received in 2006. Purchased the stock at $3.70. I’m a new investor and only bought a few shares and invested a few hundred dollars and i’ve doubled my investment at least on this stock i personally liked.

I’m going to unsubscribe to all newsletters like s&a report and etc. I’m staying with The Motley Fool and of course the gumshoe. Its all i believe in for now.

Kurt
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Kurt
June 14, 2008 7:42 pm
Hi StockGumshoe! Long time reader but wanted to comment on GTE. I do like Louis but I agree he was a little late on this one. I bought it back in 2006 to see it dip down into the $1-$2 range. I still held onto it and bought more since it was Gran Tierra’s management and business strategy that I was impressed with and knew it was a matter of time for it to turn around. It recently appeared on the AMEX which I think has helped provide some of the Wall Street limelight. Even Jim Cramer’s recommendation back around… Read more »
Gravity Switch
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June 18, 2008 6:36 am

Louis is still pushing this one — email today says it’s now the “last chance” and that the shares should hit $12 by Friday the 20th (yes, for those counting at home, that’s three days … including today). It has done very well so far, a 25-30% return in just a week or two, which is another reason people won’t ask for money back just because it might not hit the actual teased return … still has to go up 50% from here to hit $12.

Max Value
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Max Value
June 22, 2008 6:32 am

Just for the record, 20th June GTE day’s range 7.01 – 7.90.

Deb
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Deb
June 22, 2008 4:23 pm

Hello all…….just checked google Finance on this one
http://finance.google.com/finance?client=ob&q=AMEX:GTE

Was upgraded to a buy by analysts and will be included in the Russel 3000 when its reconfigured at the end of the month.

I will probably buy this on Monday speculatively and place a stop loss just to Cover my A$$. Coverage has been decent lately.

Gravity Switch
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June 13, 2008 11:45 am

Thanks Blurpie — makes sense, and probably also is a useful reminder that most careful investors don’t match the performance of a newsletter, even if they like it and follow it pretty closely.

Mr. Nabloid
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June 13, 2008 11:35 pm

Most people never ask for refunds, for any product or service.

Blurpie
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Blurpie
June 14, 2008 4:42 pm

So, you paid 5K for this newsletter, it doesn’t deliver on its promise, and you DON’T ask for a refund? :-S Interesting.

Gravity Switch
Admin
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June 14, 2008 7:41 pm
It’s true — at least for a lot of people. The act of asking for a refund is admitting a failure, so many of us are very reluctant to do it except in obvious cases of product failure or big ticket items. It’s the same reason companies like LL Bean can afford to have no-questions-asked refund policies — there will be few enough people that ask for a refund that promising one is often a good business move. For many people, once you’ve bought something you are predisposed to like it and overlook it’s flaws, and once you subscribe to… Read more »
Gravity Switch
Admin
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June 14, 2008 7:46 pm

Thanks Kurt — it sure is getting a lot of attention this year, interesting prospects. Thanks for the comment, and for reading.

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