I was looking into a couple little eensy teensy microcap stocks that are being touted this week, and I just didn’t have the heart to write about them for you — I do cover microcaps from time to time, but I know that most of you are too experienced and sober to be investing in these with any regularity (or even taking them seriously at all)… and, frankly, I don’t feel great about the fact that my writing about a $10 million stock can cause it to jump up by 25% even if I say unflattering things about it.
So I might mention one or two of those teensies later in the week, maybe in the Friday File where we’ve got a much smaller audience, but I decided to mentally switch gears to “big growth” — an area where a lot more of you are likely to be interested, and where the companies are, as a rule, far more mainstream and reasonable.
Navellier’s shtick is to focus on growth above almost all else — growth and momentum in both earnings and analyst estimates and growth in sales and margins are all important in his quantitative system, and that system has sometimes done well for long periods of time… though is also, according to Hulbert, has performed quite poorly during bear markets. The newsletter he’s pitching today is his Blue Chip Growth, which is one of his lower-priced offerings (about $100/year these days, his other letters are typically $1,000-$5,000) and the one that Hulbert says has typically done best among his newsletters in the past (other more expensive letters focus on smaller cap or “emerging” growth stocks, Blue Chip usually covers large cap companies that most of us will have heard of).
And he thinks things are pretty good for some stocks, the attention-getting bit is that there’s a “seismic shift” and a “disaster looming” for the broad stock indexes. Here’s how he puts it:
“The soaring greenback is destroying sales growth and earnings for large and mega cap multinational stocks that get a significant portion of their profits from outside the U.S.
“That is a disaster for hundreds of big name, widely held stocks.
“And it spells big trouble for the Dow and S&P 500 Indexes, which are over weighted with these big multinational stocks.”
His stocks, however, will be benefitting from the “Goldilocks Economy” enjoyed by those companies who don’t depend on overseas profits…
“You see, this is what I call a ‘Goldilocks’ economy. This moderate economic growth with a hint of worry is “just right.” Not so hot that the Federal Reserve needs to do anything drastic with interest rates, but not too cold either.”
Summing up, from Mr. Navellier:
“The really important takeaway that most investors are overlooking right now during the never-ending Fed guessing game…
“No matter when the Fed finally raises rates—whether that is in October or December or not until 2016—this first rate will be minimal and I expect the Fed to take a “one and done” approach, making it the only rate hike for quite some time.
“That means rates will stay near zero well into next year.
“That is great news for savvy companies (like the ones on my buy list today) that are using cheap rates to borrow money and invest it in continued stock buybacks, business expansion and M&A.
“That’s why, contrary to all the doom and gloom you are hearing in the media, all of my analysis, all of my indicators and all of my 30 years of hard-won experience tells me that the next 18 months can be a fantastic time to make money IF—and only if—you own the right stocks.”
I actually more or less agree with him on that big picture stuff, but — despite his claim of being an iconoclast — so do lots of other folks. The consensus, as I interpret it, is that rates will go up slowly and not very far in the next year or two, and that the dollar will remain strong. Don’t know if that’s what will really happen or not, but it makes sense to me.
So, then, what are the stocks on his “buy list” for this environment? Let’s go through the clues one by one and see if we can name a few of them for you…
“Top Stock #1: Conservative Stock Delivering Aggressive Growth
“The first stock on my buy list is a consumer staples and retail play that gets 100% of its revenue from right