Whenever you’re feeling blue about the market and don’t have the stomach for some Jim Cramer ranting, a nice substitute can be a trip over to Louis Navellier’s world, where there’s always a promise of extraordinary growth somewhere.
Today Navellier, a quantitatively-minded growth stock investor (meaning, his system sifts stocks largely based on trends in earnings, analyst estimate changes, revenue growth — particularly earnings beats and analyst raises and the growth in estimates), has been promoting his Emerging Growth newsletter recently with a pitch that he has found the “Perma-Bulls” you want to buy during down markets like these.
And he says he’s been preparing for this weak, toppy market for months now — here’s how he puts it:
“With the strong end to 2013 and the tremendous start to the year, I knew that quarter-end profit taking would hit the market.
“So my team and I went to work on creating a can’t-lose plan to guide my readers—individual investors just like you—through what could become another market ‘fake out’ that would send them to the sidelines and set them up to miss the next round of profits… even though no one would see it coming until it was far too late and the bears started making front-page news.
“My team and I drew up a blueprint that could create a fortress around my reader’s wealth. It had two prime directives:
- Safeguard my readers through a worst-case scenario with investments to count on for strong profits during the market volatility.
- Ensure the plan would include only stocks that would be the first to come back after volatility subsided.”
“Our unique and intensive research process uncovered three under-the-radar stocks that are about to emerge from the pack with unstoppable growth.
“And I’d like to share the details of these companies with you.”
He’d like to share, that is, if you’d like to subscribe to Emerging Growth — that’s not his most expensive newsletter, but at $995 a year it ain’t cheap for most individual investors … and the appeal of paying 20% more for the quarterly option (special deal! Only $295 for three months!) is, well, limited.
So… shall we find out what those three “Perma-Bulls” are that he wants to buy? Who knows, maybe you’ll love these stocks and they’ll make you rich — and then you’ll decide you want to subscribe to Navellier’s newsletter. But for now, let’s see if we can get you some answers a bit more free-ishly.
“Perma-Bull #1: The Ultimate Energy Stock
“This play is relatively young company in the energy game. But it is taking the industry by storm.
“The company is leading the fracking boom with excellent oil and gas resources in the United States.
“And the financials are solid. Sales Growth for the upcoming quarter is expected to reach 38% while Earnings Growth is set at 35%. And analysts are STILL moving their estimates higher.
“How are margins? Profit margins are north of 16% and operating margins are a stunning 30%.
“Add up these figures, and they equal one HUGE profit maker. I’m looking for its stock price to go through the roof in early 2014. This is a stock I’d jump on quickly.”
That’s probably not enough for me to be 100% certain of the Thinkolator’s match, but we do have one excellent match from the first pass of results so I think we’ve got a very good chance of this being: Matador Resources (MTDR)
That’s an oil and gas stock, yes, also relatively young (went public about two years ago) and is in the fracking business (as are hundreds of other companies), but it does also have profit margins just over 16% and operating margins at 30% as of their last quarter … so that’s a solid match. And they have had analysts upgrading their earnings expectations of late with some unanimity, which is a little bit unusual (most oil and gas companies I’ve been scanning through have both upgrades and downgrades to earnings estimates over the last couple months).
Analyst estimate averages depend on which service you use, so it’s hard to say what a real match is in that area — the compilation at Yahoo Finance tells us to expect 40% sales growth and 45% earnings growth this quarter, though earnings for the full year are expected to be flat before growth picks up again in 2015.
This also shows up as a highly rated IBD stock, which tends to coincide with many Navellier-liked stocks (IBD’s method also looks for growth), and the stock has been a top-rated one by Navellier’s Portfolio Grader for more than six months and was recommended by him in a short appearance on CNBC a few weeks ago, so we know it meets his criteria and he likes it. And while they just met earnings expectations in the fourth quarter they did blow them out in the previous three quarters, and huge earnings beats have tended to be one of Navellier’s favorite indicators.
This is still a fairly small company, with a market cap under $2 billion and not much debt. They are active in mostly Texas and Louisiana, with several hot ticket keywords like “Eagle Ford Shale” and “Permian Basin” coming up next to their name, but I don’t know much about their business. They are priced for growth and they have been growing nicely, with a forward PE of about 15. I’ll leave the researchifying on this one to you, go forth and do your cogitating … if you learn anything interesting, feel free to share it with a comment below.
We’ll move on to number two …
“Perma-Bull #2: The Super SupplierAre you getting our free Daily Update
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“Believe it or not, it takes a lot of equipment, parts and supplies to keep the lights on. My next company is THE provider of products and services to electric utilities in the U.S.