“$10 Garbage Stock to Quadruple Again” Navellier

By Travis Johnson, Stock Gumshoe, December 7, 2009

After not looking at a Louis Navellier ad for quite a while, here I run across several fun ones in just a couple weeks — we saw his promise of remarkable momentum and a double from his favorite handgun stock, Smith & Wesson, about a month ago (hasn’t happened … yet, to be charitable). And his favorite diet stock is predicted to go gangbusters by Valentine’s Day (and it is, at least, up a bit so far).

Today, even sexier, it’s the promise of a quadruple! Here’s what Louis Navellier says — this time, he’s promoting his Emerging Growth newsletter, which will run you $995/year:

“Grab it Now Before it Declares Another 1,000% Earnings Growth ….

“One of the country’s fastest-growing and least-known medical waste companies is about to declare ANOTHER blow-out earnings period and quadruple investors’ money again

“If you want to grab the next wave of profits, you must add it to your holdings now.

“Here’s Why:

“This company is the market leader in the niche medical waste disposal field for medical and pharmaceutical waste generated outside hospitals.

“The company has already quadrupled investors’ money since January 1st and is about to do this again.”

This is a firm that handles medical waste for pharmacies and doctors’ offices, the little containers that you always see in the exam room — but apparently the revolutionary thing is that they do it by mail … dare we hope, a Netflix for bloody gauze?

Here’s how Louis describes it:

“The company’s government-approved waste disposal by mail system makes it not only easy and convenient to dispose of hazardous medical waste but also comply with all laws—and at significantly lower costs than contracting with a local garbage company and with none of the paperwork.

“As a result, sales and earnings continue to shoot through the roof as the company simply has no real competition in its sector—thanks to its Environmental Protection Agency approval.”

That’s all well and good, of course — but despite what Navellier says there is actually a fair amount of competition in this sector, I’ll leave it to you to decide whether it’s “real” or not. What we need, then, are some specifics about the company to make sure I share the right name with you …

“Registered 1,000% earnings growth last quarter

“Delivered 258% sales growth last quarter

“Handed investors 412% gains year to date

“A market cap of under $150 million

“Environmental Protection Agency approval on a number of disposal-by-mail systems that certify safe destruction of bio-waste.

“One of the strongest buy ratings of any of our stocks, and

“Is about to clobber Wall Street and double investors’ money again—thanks to a number of new laws around the country that mandate disposal of bio-waste outside hospitals.”

He then goes on to have his cake and eat it, too — claiming that only one analyst covers the stock and does it poorly … but that part of the excitement is the company’s ability to beat earnings estimates.

“That’s because nobody—and I mean—nobody is covering this stock that I know of but me. To be sure, there is one advisor who covered this stock—but not very carefully.

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“The last time he covered it he downgraded it—and that was nine years ago! ….

“The company also blew away the analysts expectations with a 23% earnings surprise…”

And he even throws out the names of a few institutional investors …

“Oberweis, Bridgeway and Spartan, along with a number of high-profit boutique mutual funds, have plunked down millions of dollars to grab the next wave of profits.

“And that’s just on the mutual fund side.

“On the institutional side, a number of pension fund managers from the states of Texas and Pennsylvania have, together, plunked down more than $1 million of their retirement funds on this one…”

Of course, the managers of Texas state pension funds probably plunk down $1 million on office furniture and donut deliveries every month, so that number doesn’t sound that exciting — but it is, at least, a clue.

And that’s at least three times as many clues as we really need — but I do so love to have extras, especially on a sleepy December Monday. So who is this fine little toxic waste mailer?

Thinkolator sez: Must be Sharps Compliance (SMED — get a free trend analysis from MarketClub here)

They got their name, as you might expect, from disposal of “sharps” — primarily needles and the like, tossed into those familiar red plastic boxes, but they do also dispose of medical waste, and they do allow for collection by mail.

And the clues are a nice, tidy fit — down to the mutual funds and insitutional investors who hold shares. And institutional ownership of the shares is increasing significantly as of last quarter, which is usually a good sign for a tiny stock. Perhaps more promising, even though the insiders have been significant sellers, is the fact that insider ownership is genuinely massive — I always like to see management own a big slice of the company, even if they are gradually selling off some of their holdings.

The stock has been on a remarkable run, and to all-time highs around $10, this is not a bounceback recovery from the bear market, though they did dip a bit over the winter, this is a stock growing to these heights for the first time. And the earnings did go up dramatically, in the most recent quarter, though four cents to forty cents is not, neat though it sounds, a 1,000% gai