“Million Dollar Machines! (part one)”

Navellier recently sent out an email teasing five different “Million Dollar Machine” companies that he has recommended for his Emerging Growth newsletter. Since someone kindly stepped in and noted all of the Stansberry 801K stocks in a comment on my last post, I thought I’d move right along and get to these machines …

What is a “Million Dollar Machine?” Navellier seems to think it’s a stock that will make you a million bucks — he cites Hansen, which would have made you a million on his recommendation … if you had put in $100,000. Still, not bad for a year or two’s work.

He recommends putting your money into several of his Emerging Growth stocks, and he teases five different ones in the latest email I’ve seen … as he puts it, “this is not about tech—and it sure ain’t about risk.”

Here are the first three, at least as far as the Gumshoe’s addled brain can take us today:

Million Dollar Machine #1:

This is a “small Iowa fertilizer company [that] is up nearly 50% this summer. Analysts are falling over themselves to raise their earnings estimates.” He cites it as important because of ethanol, and because of the need to dramatically expand the corn crop.

So … that’s not a lot to go on, but there are two decent candidates out there that I’ve noted: Terra Industries (TRA), and Terra Nitrogen (TNH). Technically, “this summer” is only a couple weeks old so I assume he didn’t mean it had gone up 50% since late June, but TNH is up about 50% since mid-June, and TRA is up about 50% since early June. Not bad for either one.

And these are, really, the same company — just two different ways to invest. Terra Nitrogen is a limited partnership with a yield of nearly 5%, they own the income from one of Terra Industries’ nitrogen fertilizer operations. Terra Industries also owns other fertilizer plants, and is the general partner and manager for the LP (and doesn’t pay a dividend at the moment). Both are profitable and right around $2.5 billion in market cap.

I don’t really know for sure if either of these is Navellier’s teaser company, but they are the only publicly traded Iowa nitrogen fertilizer companies I’m aware of — though it’s possible there are others, and it has been a great Spring and Summer for all fertilizer companies, but TRA is my best guess about this “Million Dollar Machine” because it actually does have analyst coverage (unlike TNH), and analysts have upped the estimates in recent months.

Million Dollar Machine #2

“in the last 18 months, the pieces have come together and now, yes, at long last, computers can…LISTEN. Listen and transcribe accurately.”

This is a voice recognition software company, particularly focused on the medical market, that has become an industry leader very quickly thanks to its cutting edge technology.

It was at $16.83 “a few weeks ago,” shot up to $21, then dipped back down into buying range.
“Earnings were just released: Sales, up 30%. Earnings up 765% … Margins up from 2% to 12%.”

Navellier sees this company becoming the leader in this industry by accumulating small competitors.

The obvious fit for this is Nuance Communications (NUAN), which is doing well in the medical transcription market and is a leader in the voice recognition software busienss — but obvious may not cut it here. NUAN is fairly small at a few billion dollars, it has a good market share, but … it doesn’t have anywhere near those kind of improved margins, and earnings have not gone up 765% in any reasonable recent timeframe (though they are almost positive now). It also, while it’s now right around that $16.83 point, has never been up to $21 (it did spike to $19 or so).

It’s not Interface, either (INTV), though that’s also in a similar business — the share price is much too low to fit. Tellme Networks is now owned by Microsoft. Nuance is a big position in at least one of the Navellier funds, so maybe he’s just using some odd — or old — numbers in the tease. If anyone has a better solution for this one, please let us know.

[Update — a couple of readers noted that this might well be Transcend (TRCR) … and I think they’re right. It’s got the profit margins and the price action is nearly as teased. Most importantly, quarterly income growth was almost exactly 765% last quarter. They also focus much more intently on medical transcription. Thanks for the idea, don’t know why I so totally missed this one … and unfortunately, the stock’s already shooting straight up again]

Million Dollar Machine #3

This one is a beer company, which Navellier thinks may take on BUD the same way Hansen took on Coke.

“With 27% sales growth and dizzying 215% earnings growth this year, this company is doing for beer what Hansen did for soft drinks!”

“The best is ahead for this brewer: their new line of brewed iced teas is taking retailers by storm.

Is this another 8,118% gainer over the next 5 years, like Hansen? That’s Navellier’s tease, but I think this company must be Sam Adams (SAM). They did have 27% sales growth year over year in the last quarter, and they do have a line of hard iced teas called Twisted Tea, though the idea that it’s taking retailers by storm is probably nothing but hyperbole … it doesn’t seem to have done very well just yet.

It’s possible that this might be another small brewer, since the 215% earnings growth number is a bit of a stretch for the past year, but there are only a few other publicly traded ones — Pyramid and Red Hook, among a small group of others — and none match up on products or sales growth numbers. Since SAM comes pretty close, with earnings actually growing more like 300% year over year if you look at the last filings, I’m willing to bet that this is probably the right one.

Not a lot of certainty from the Gumshoe today, eh? I guess I lose a little something when I go on vacation. Monster Machines 4 and 5 to come in another post.