by Travis Johnson, Stock Gumshoe | February 5, 2009 10:47 am
Here’s what Louis Navellier tells us in his latest teaser ad:
“This ‘Obama Stock’ went from $8 to $60 in the last infrastructure build-out. Now it’s ready to do it again! Buy on Friday!
“I have found the Perfect Obama Stock–and I am releasing its name–and a doubler trade for it–at 5:30 p.m. EST, Friday, February 6.”
So I guess there’s no mistaking the message there, eh? Navellier’s copywriters cannot, at the least, be accused of being too subtle or equivocal.
The question for the great Gumshoe multitudes, however is “what’s the stock?” If Navellier is going to tell his subscribers to invest in it tomorrow evening, does it do us any good to learn what the stock is today?
I don’t know, of course — sometimes these Navellier picks pop for a day or two, sometimes they don’t. But I can dig into the clues and see if the mighty Thinkolator can tell you what the stock is …
Here’s some of Louis’ selling language:
“This tiny company sits at the crossroads of several Obama favorites, making it a double… maybe triple… winner in the trillion-dollar bailout bonanza.
» infrastructure build-out
» massive clean energy and clean environmental spending by Washington
» fast development of a smart transmission grid
“Examples in these areas: Martin Marietta Materials, Mohawk Industries and Dycom Industries are up 23% – 37% since November lows. That’s some of the market’s best returns. But alas, there are also analysts’ favorites for a stimulus play. So no bargains here.”
So we get the general idea — this is some kind of infrastructure company, probably engineering & construction or something along those lines. Some specific clues?
A PE of “under 10”
He explains that one of the reasons for the failure of the great fiberoptic buildout of the late 1990s was a lack of “trench-diggers” and backhoes … apparently this is a company involved in that, somehow.
“Our trench-digger soared from $8 in 1998 to $60 just before the tech bubble broke. Today it’s back down around $10 again–and ready for its next run… not to $60 perhaps, but the potential is there!”
Sales have risen 49% “in the past four quarters.”
Earnings are coming out on February 23. They earned 15 cents a share at this time last year, Navellier thinks they’ll earn $1.10 or more this time (for the year, I assume — he says the analyst estimate for this quarter is 26 cents), and raise their guidance.
For those who haven’t looked at Navellier’s stuff before, he’s all about quantitative analysis of the fundamentals — his system particularly focuses on stocks that beat analyst estimates and raise guidance, among other growth metrics (sales, earnings, etc.).
So … all this teasing is in service to Navellier’s Emerging Growth newsletter, which normally costs about $1,000 a year (assuming anyone ever pays the full retail price). He’s trying to grab new subscribers now with a three month subscription for $99, but that’s still some real money for most folks … so let’s see if we can identify the stock before you think about whether you want to subscribe. OK?
Right, then. Into the Thinkolator it all goes…
… a few moments on “pulse” … and voila! (or as my daughter puts it, Wa La!)
Louis’ top pick for tomorrow evening is MasTec (MTZ)
This is a company that has historically been focused on telecom infrastructure — digging those trenches, in Navellier’s words. The consensus analyst estimate is 26 cents a share for this quarter and was 15 cents for this quarter a year ago. $1.10 must be Navellier’s optimism creeping in, because the average analyst expects them to make just under a dollar for 2008 (and $1.11 in 2009).
And yes, they did enjoy the tech boom while it lasted — the shares did go from roughly $8 to $60 during the late 1990s before the bust, and the shares are right around $10 today. And just to complete the circle on those clues, they have shown 49% sales growth over the past year.
They were featured in Investors Business Daily last week, and they have made some efforts to diversify away from their heavy reliance on telecom companies with, among other things, acquisition of a builder of wind farms.
Will this one be a profitable investment? Analysts seem to think so — they’re predicting continued growth and it comes in with a Price/earnings/growth ratio of .81. Lots of growth companies have nice low PEG ratios these days, so it’s hard to say that “anything under 1 is a bargain” as we were wont to do back in the good ‘ol days, before Citibank and Bank of America became small caps (OK, that’s an exaggeration — they both still have market caps around $20 billion … but remember when they were fighting to see which could get to $250 billion first? Oooof).
MasTec is genuinely a small company, market cap around $750 million, with what looks like a reasonable amount of debt (about $175 million net debt — don’t know when it comes due). And while they are largely a telecom company there may well be a chance that they can profit from some infrastructure stimulus spending, if it appears — when you hear folks talk about one stimulus being a rollout of more broadband access to rural areas, that’s certainly a potential market for MasTec, and they do also have some smaller divisions in engineering, construction, and water work. I’d hesitate to say that they’re perfectly positioned, but they are at least in the kinds of businesses that are being talked about as part of a potential stimulus boom.
Is that enough? Well, that’s your call — they’re small, they’re profitable, they may have learned from their mistakes in the late 1990s (no guarantee on that), and it looks like Navellier will be recommending them to his readers tomorrow evening. Let us know if that piques your interest, or if you’ve a better idea to share with a comment below.
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