We haven’t tried to sniff out a Louis Navellier pick for quite a while — partly because he hasn’t had a lot of single-stock teaser ads running lately, and partly because, well, they haven’t piqued our interest.
But everyone loves the idea of “buy and forget” stocks — it can be fun to be a trader in some ways, scalping a few dollars here and there on the brilliance of your timing and the nimbleness of your typing fingers, but I think, if we’re honest with ourselves, that what we really want is to be the 75-year old who’s waving from his yacht that’s named I bought JNJ at $2 in 1980.
Who knows if there will be opportunities for those kinds of compounding, wealth growing companies to look back on in 30 years … but usually the long view is the safer one to take.
So when Navellier promises a special report about his best “buy and forget” stocks for this year, even though we know his highly momentum-driven stock-picking system doesn’t ever really “buy and forget” anything, we want to know what the stock picks are. And if we’re going to get that Yacht, we’ll have a head start if we don’t shell out a hundred bucks for his “Free” report (and a subscription to Blue Chip Growth). That newsletter, by the way, is very much growth-oriented (heavy weight on rising earnings, rising estimates, etc.), has been around for a long time and has had some very strong stretches and a couple really terrible ones (2001 and 2008, as you can probably guess) … according to Hulbert, it shows an average annual return of about 8% over 15 years.
On to the picks? Yes indeedy, here are the clues to whet your appetite:
“An Auto Parts Stock That Has Averaged 20% a Year for 20 Years!
“The company’s stock has risen 27% since July… but it’s been earning 20% or more a year since 1993… enough to turn every $10,000 invested into $383,374. And it shows no sign of letting up!
“Plus: 2 more ‘buy and forget’ picks that are up more than 30% in the past year… and have averaged AT LEAST 12% a year for 25 years running!”
Well gee, you just gotta know … right?
Here are the clues for the auto parts company:
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“… one chain in particular has always had my attention. It’s not a household name but it has more than 3,400 locations throughout 38 states as well as a lucrative online store.
“The company caters to both do-it-yourself customers and professional installers. And it sells everything from new and remanufactured auto parts (such as alternators, fuel pumps) to maintenance items (oil, antifreeze), accessories (floor mats, seat covers) and auto body paint.
“The company also specializes in locating hard to find parts, making them a go-to choice for car enthusiasts.
“Let me tell you, business is good. Really, really good.
“In the third quarter, the company’s retail sales rose 11% and overall sales rose 13% to $1.43 billion compared with $1.26 billion in the same quarter a year ago.
“During the same period, its earnings rose 30% to $117 million.
“Recently, the company’s estimates have been revised even higher, to $1.35 per share. Analysts now forecast an eye-popping 18.4% earnings growth.”
Well, this is timely because it turns out the Thinkolator sez Navellier is here pitching O’Reilly Automotive (ORLY), which just released earnings today, beating analyst expectations by a penny and getting a nice 5% pop in their share price.
ORLY has indeed been a spectacular long-term performer as they’ve built a large nationwide retail network over the last 20 years or so — the stock has gone from a split-adjusted $2 or so in 1993 to now about $105, so I’m sure there are few “buy and forget” owners who are complaining about this pick, even though it did have a few bad spells along the way. ORLY is the most expensive of the big auto parts chains by most metrics (forward PE of about 16, AutoZone and Advance Auto Parts are down around 12-13 and of similar size, Pep Boys is much, much smaller and also trades at about 16X next year’s earnings). ORLY has some solid growth expectations built into the stock, but their outlook when they released earnings today was well-received by investors, so they’re humming right along at the moment. The press release for the earnings announcement is here, they missed on revenues but beat on earnings and guided for a better second quarter and an “as expected” full year 2013.
They don’t always hit their numbers, of course — that’s why the stock dipped to $81 as Navellier teased last July, it had fallen from $100 and it didn’t recover to that level until earlier this year. They don’t pay a dividend or have much debt, so it’s really all about growth and growth expectations — the one-sentence “story” for auto parts companies in general is that they’re supposed to be beneficiaries of the active used car market and the fact that people are extending the lives of their cars and fixing them themselves in bad times, and of upgrades and accessories and the continued consolidation of a fragmented industry in good times.
I haven’t looked at these companies in a long time, but they’re all pretty similar in terms of margins, valuation, etc. (tickers ORLY, AAP, AZO, PBY) if you want to start digging around for yourself.
I have to cut it short today because I have to pop away from Gumshoe HQ for awhile, but I’ll get to the other two picks shortly — I listed the quick Thinkolator results for those two, which are probably AMGN and GPS, in the Irregulars box above, but will have to make time later on to add some thoughts on them and confirm the Thinkolator’s findings (sorry!). If you’ve got thoughts on any of the above, or on growth-happy Mr. Navellier, feel free to let ’em loose with a comment below.