“Action Plan for the Wipeout!” Navellier

By Travis Johnson, Stock Gumshoe, December 18, 2008

Louis Navellier started marketing his services late on Tuesday with an email that has the subject line: “Today’s Cut Takes us to the Brink!”

He’s selling what he calls his “Action plan for the wipeout,” which he introduces thus:

“I have been telling my customers for several weeks now that this is the greatest buying opportunity of our lifetimes. But let me clarify: It’s not as simple as buying any old stock that’s cheap now, it’s about owning a mix of the highest quality stocks.

“That’s why I have spent the last few weeks creating what I call Action Plan For The Wipeout. Act today and you can put this plan to work for you, beat the market by over 3-to-1 AND be able to look at the morning news without flinching.

“Here is exactly how to implement this Action Plan For The Wipeout.”

He teases us with a handful of big growth stocks, which are always his bread and butter, and you may not be surprised to hear that they’re pretty much the same teases — and the same stocks — as he was touting a couple months ago, though the shares for the most part haven’t moved significantly in the interim.

Louis essentially tells us that we should be looking for the highest quality growth stocks, and that many of them look cheap now — he specifically mentions that he’s looking for great cash flow, high and rising margins, and earnings surprises.

So, without further ado …

The “Best High Growth Blue Chip Now”

“Our top high-growth blue chip helps cancer patients live longer, better lives. It’s got a ground-breaking product line, ready to go, and the growth profile is glorious—there’s just no other word for it.

“In 3 weeks it reports. In the last 4 reports, it has come in way ahead of expectations, and the stock has reacted with a 7% – 10% jump of joy. Buy it now.”

This one is almost certainly Intuitive Surgical (ISRG), the maker of the da Vinci surgical robot, and they have a history of often beating earnings estimates, and have been a growth darling for years. He has used this same language to tout ISRG before, but they’re probably not going to report in three weeks — they reported their last quarter in mid-October, the last time I wrote about a similar ad from Navellier, so the next report is more likely to come in mid-January at the earliest, and their last January report came on January 31.

I bought back in to Intuitive Surgical a few weeks ago, at more or less the same price it’s trading at as I type this. They trade largely based on their sales of new da Vinci systems at this point, but they have a strong and growing cash flow from the sales of the semi-disposable tools that are used by the robot, and from service contracts. At some point the growth will plateau, but they should remain a very profitable company — the question is, will the plateau of adoption of the surgical robot come in the next couple years, or do they have many more years of dramatic growth ahead? They still have essentially no competition in this niche.

Oh, and these machines are expensive — $1 million+. So if hospitals can’t raise the money to buy more of them, they could easily take a short term hit … ISRG doesn’t depend on debt, but their customers certainly do. It’s as cheap as it’s been in quite a while, but it’s only cheap if you believe the growth will continue… and I own shares now and have followed the company for many years, so I’m quite possibly biased on this.

Moving on!

“The Best Long Term Blue Chip”

“This cereal stock pretty much guarantees you market-beating returns for the next decade. Plus, as people skimp on eating out, they become bigger users of discount coupons. This is where our cereal company absolutely dominates.

“PLUS, wheat and corn prices are down—which sets ups up for a nice surprise in earnings season. It trades at 16 times earnings, too—so you snap up a bargain.”

Going just from those clues it could be either Kellogg (K) or General Mills (GIS), and both are given an A rating by Navellier’s portfolio grader service. Given his past writing about this sector, I’d be fairly certain that he’s talking about General Mills. Those two companies have very similar financial profiles, but General Mills is arguably a bit more diversified and value priced at the moment. If you want to go down the chain in the same sector, you could also look at a smaller company like R