“China’s $50 Billion Shocker” Part 2 … Navellier

Not long ago we took a little gander at a stock Navellier has been touting as a potential recipient of hot, incoming Chinese investment funds. I promised a glance at the others, too, so here we go.

“Hot Money Stock No 2: As I regularly remind my readers, the master key to investing in stocks can be boiled down to two simple words: earnings growth … Hold on to your hat—in the past four quarters, the company has not only posted 17.2% sales growth but also a whopping 1,407.7% earnings growth. So it’s no surprise that the company is up 40% over the past 12 months.”

What else do we find out about these guys?

They have “virtually cornered the market on Canada’s cable, mobile phone, and telecom industries. When you add in the company’s interests in media and publishing, you can begin to see a Google-like sales growth headed its way.”

Apparently, Navellier believes that most of us have never heard of this “Canadian powerhouse”, so we can still get in before prices explode to the upside.

His advice: “Buy this one now, before the next reporting period, and you could be looking at a quick 30% to 40% quarterly gain.”

You might have already guessed this one — it may not be an American household name, but it certainly has that status North of the border. This is Rogers Communications (RCI)

Again, Navellier has liked this one for a while — I don’t know if he got his subscribers in and out of it when it hit $53 last year then dipped down to $33, but he was touting it at least up to $50 or so at the end of the Summer. The price is around $40 now. Analysts are predicting decent growth, actually pretty solid growth for such a larger company, but they aren’t exactly showing blowout surprises — they’ve been beating estimates, but just by a little.

Rogers is a $25 billion company, sort of comparable to a Verizon or AT&T for Canada, though they’re more diversified than most — they’re both the biggest cable company and the biggest wireless telephone company in the country, plus they own a bunch of magazines, TV stations, Cable TV channels, and the Toronto Blue Jays.

It’s certainly growing, but I don’t know much about the regulatory environment in Canada or what kind of competitive threat any of they older media companies pose. Rogers is the jewel of the bunch up there, to be sure, but at some point one would imagine that they would run out of space to grow in a relatively sparsely-populated country (No offense to Canadians, but it ain’t like buying a mobile phone provider in India, with almost unlimited growth). To some extent, big media companes make me more comfortable when they’re clearly “value plays” and trade at a deep discount — Rogers does not, but they’ve got the growth to show for it, so it may be right up your alley.

Plus, maybe the Canadian dollar will take another leap forward — that would make those earnings in loonies look quite a bit sweeter for Americans. On the other hand, of course, if the Canadian dollar falls back below the current range (near parity with the US dollar), their earnings will look worse. Let it be said that the Gumshoe has no crystal ball for earnings or currency movements.

Like what you see, eh?


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Paul Albert
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Paul Albert
June 8, 2008 10:27 am

Do you ever critique mutual funds?

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Michael
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June 8, 2008 10:52 am