You know who I’ve been missing lately? Good ‘ol Louis Navellier — no one spins a promise and gets the heart racing for a growth stock like he does … so even though his latest ad isn’t one of the oldies but goodies (“this stock will double in a month or your money back!”), it’s still pretty sexy, and I thought you might be interested.
The latest pitch, for Navellier’s Global Growth newsletter, tells us that he knows where the “next Silicon Valley” is — he says it isn’t dead, it just moved, and he and his readers know the top secret location. Not only has he apparently been putting stocks from this country on his buy list, but he’s also got “the most profitable one of all” that he’s scheduled to release to his subscribers tonight.
Well, the email came yesterday so I guess that’s now “last night” … not being one of those subscribers, I feel so left out … so lonely … perhaps solving his little puzzle and revealing the name of the stock will close up the empty spot in my heart? Only one way to find out!
Here’s how he describes the “next Silicon Valley” and whets the appetite for this new stock pick:
“More start-up companies per capita than any other country in the world
“Silicon Valley and Its Profits Moved 7000 Miles Away
“Next big winner announced in tonight’s issue of Global Growth….
“A second great technology earthquake is shaking up the globe, but this time, the epicenter is not in California‚s Silicon Valley.
“Silicon Valley has been the center of technological innovation for two decades. The products and the profits have been life-changing, but a new leader has emerged and companies and investors are flocking to the new tech Mecca.
“This time, it’s found in a country with fewer people than the state of California. Fewer even than the city of Los Angeles!
“But what the home of the ‘Next Silicon Valley’ lacks in size, it makes up for in innovation, drive and hustle.
“Let’s face it, California is a basket case — mismanaged, overtaxed and bankrupt. The old Silicon Valley isn’t coming back, and its brightest stars are migrating around the globe to new technology centers. Smart investors will follow them.
“Silicon Valley thrived because of a virtuous cycle of invention and capitalist spirit that fed off itself. Driven leaders, hungry young technology geniuses, patient angel investors and aggressive financiers all worked together to launch the greatest wave of innovation ever seen.
“And investors who got in early got very rich.
“Now, Global Growth subscribers are cashing in big time on the Next Silicon Valley.
“In fact, Navellier Research has uncovered no less than NINE global technology stocks from this new wealth fountain with clear doubler-potential.
“Indeed, one of them—which I am going to tell my subscribers about for the first time in just a few minutes—has the potential to be our first tripler of the year. But you’ll profit only if you get on board now.”
OK … so, in case you haven’t guessed, yes, the “next Silicon Valley” in Navellier’s story is Israel.
And I don’t know that I’d disagree with him about Israel being more compelling than California in some ways, but it does seem so sad to call Silicon Valley a basketcase compared to a country whose name alone is enough to start a fight at a cocktail party.
So what’s the specific stock he picked for his subscribers last night? Well, the easy way to find out would be to subscribe to his newsletter … but that’s $4,500 a year … so let’s do this the hard way, shall we? Here are the clues about his next hot stock:
“My top technology play for new money is an innovator in both stolen vehicle recovery systems and global positioning devices. You can think of them as a combination of Garmin and Lo-Jack, and their sales and earnings growth are white-hot.
“As an industry leader, this company is stealing market share away from its competitors and it is rapidly expanding to emerging markets where a new global middle class of millions of consumers is growing their wealth with each passing day. These new customers for our top tech stock are buying cars hand over fist, but they want to make sure they get where they’re going, and they ant to make sure those cars DON’T get stolen.
“In fact, this company already dominates sales in Brazil, and is expanding throughout South America, Asia and China at a record pace.
“For the last 2 years, this stock has been a real sleeper, bumping along at between $12 and $16. But the new data I’m seeing tells me that its earnings report is going to be a blockbuster. Sales were up 35% in the first quarter of 2010, and should grow another 25% when earnings are released in a few weeks.
“Even better, my research tells me that second quarter earnings should explode by nearly 110%! With a very modest Price-to-Forward Earnings multiple of 17, those earnings are going to light a rocket under the company’s stock.”
And Louis even tosses in a little warning about the stock in his P.S. about it trading in low volume — so perhaps even more unknown, and more enticing!
“Our newest technology winner is thinly traded, so I’m advising all of my Global Growth readers to place tight limit orders when they buy. Under no circumstances should you place a market order—you could get badly burned.”
Though that advice goes nicely with just about any pick, of course, I’m no fan of market orders for anything.
So who is this secret stock? Well, the clues are not an exact match … but I think Louis Navellier must be teasing us about: Ituran Location and Control (ITRN)
Ituran is the market leader for GPS and vehicle theft systems in Brazil — or at least, they say they are, per this quote from CEO Eval Sheratsky in the last earnings release:
“We start 2010 very well positioned, particularly in Brazil and Israel. We continue to advance our business as the market-leader in Brazil, gaining ever increasing traction and market penetration.. For Ituran as a whole, we look forward to building and unleashing our full potential throughout this year, and we expect to realize all the rewards of our past efforts.”
Ituran is a GPS and vehicle tracking company based in Israel, with a strong position in Brazil and expansion across Asia, but the clues don’t otherwise match exactly — they reported revenue growth of about 28% in the first quarter, not 35%, though perhaps that can be explained away by the fact that the actual revenue was $35 million. I don’t know whether they’ll report 110% growth in the second quarter, but they are scheduled to release those earnings on August 4.
And the stock has not been bouncing around between $12 and $16 for two years — it’s been doing so for six months, sure, but before that it had collapsed down below $8, and had rarely been above $12 over the last two years until it recovered nicely over the Winter. And from looking at the numbers, I’d have a hard time arguing with the investors who have kept the shares “sleepy” — I do find it interesting that they’re building a strong business in Brazil, where auto theft is now so bad that they’re reportedly mandating anti-theft and tracking devices in all new cars, but they haven’t exactly been shooting out the lights, growth-wise.
If that’s going to change, then sure, ITRN would probably be a compelling idea — their service sounds like a combination of GPS and GM’s OnStar service, with various subscription levels that supply different services, from basic “theft detection” and monitoring services that alert you when your car leaves a particular area, or exceeds a particular speed, to crash sensors and concierge-style upgrades. There are hundreds of GPS companies, and several different companies that provide vehicle tracking either via GPS or, like LoJack, via special radio transmitters that connect to police cruisers, so I don’t know whether ITRN has a particular competitive advantage of any kind … but it must be a very scalable business since they primarily provide a subscription service, so I would expect that if sales take off dramatically as Navellier is teasing, the earnings should impress even more.
So that’s my best solution for this one for you — it is indeed a fairly low-volume trader, and it’s up fairly strongly at the open this morning so that might be some confirmation that Navellier’s legions are following it, but, as I said, the clues aren’t strong enough for me to be 100% sure of the match this time.
If you’ve got a thought about ITRN, or about buying into GPS-type services, just let me know (or, of course, feel free to share if you’re one of the thousands who lost their shirt on Garmin or Sirf in the GPS space — it’s a tough business).
And if you’ve ever subscribed to Navellier’s Global Growth, please click here to review it for your fellow investors. Thanks!