Everyone loves a bit of “what you should do next year” advice at this time of the year — the magazines are full of it, the newspapers issue predictions, and all the newsletter folks swirl their tea leaves around and proclaim that it’s going to be “The Year of X!”
No, not X as in US Steel — sorry. Think algebra … X = ?
And the ? in this case is answered by Louis Navellier, who tells us that his quantitative system is flagging 257 stocks to sell, including five that he calls out for special attention … and that there are five small caps that he thinks you should buy before Christmas to get ready for a great 2012.
The ones you should sell, per Navellier, are:
- “AU Optronics (AUO) gets F’s across the board from my stock rating system—demand for flat-panel displays may be booming, but AUO is managing to lose money making them
- Ruby Tuesday’s (RT) latest earnings show that casual restaurants like Red Lobster and Olive Garden may look crowded, but their price-cutting to fill the seats is hammering profits.
- Schlumberger (SLB) is an outlier in the exploding field of energy. It’s going nowhere fast, thanks to big capital expenditures, and low operating cash flow.
- Dr. Reddy’s Laboratories (RDY) has dropped 25% in the last year, thanks to tough competition in its generic drug business, plus the ever-present threat of big class-action lawsuits.
- Fibria Celulose S.A. (FBR) is a Brazilian timber company feeling the bite of the worldwide economic slowdown—it’s dropped 56% in 2012, with more to come.”
I don’t own any of those, so you can go ahead and sell them if you want to — no skin off my nose.
But what are the ones that Louis thinks you should buy? Well, those he doesn’t exactly hand out like Halloween candy … he wants you to subscribe first (yes, he’s still offering the “special” quarterly offering — instead of the “regular” price of $995, pay 20% more for the privilege of paying in installments!)
And we aren’t going to do that — at least, not just to find out about the five names he’s teasing … so let’s turn on the Thinkolator and feed it some of the clues, shall we? Perhaps we can ID a couple of these fellas for you for the low, low price of a few minutes of your time.
“Small-Cap Winner #1 is our top health-care company.
“Buy it now and sell Qiagen (QGEN), Teva Pharmaceutical (TEVA) and ResMed (RMD).
“Up 88% in 2011, this little dynamo is just getting started. Sales boomed 64% last quarter, and earnings soared 158%, thanks to big new sales for this company’s meal tickets: leading therapies for both OCD and narcolepsy.
“With a P/E of just 16 and a market cap one-twentieth the size of giants like LLY and ABT, this company is a steal. A new deal to acquire the shares of an Irish drugmaker with promising therapies in the areas of the central nervous system and women’s health should boost them into their next mega-growth phase.”
OK, them’s fightin’ words! I own Teva (TEVA), so I’ll shed a small tear if you decide to sell those shares — especially after they announced that they’d be pursuing a dividend growth policy and buying back $3 billion worth of stock in the near future. And making a lot of money next year — the forward PE on their guidance for 2012 earnings is about 7. On second thought, if you want to sell … maybe I’ll buy your TEVA shares (I know, I know — I can’t do anything with this stock for at least three days, those are the Stock Gumshoe trading restrictions).
But you aren’t investing your precious pre-holiday moments of time to find out what I like — what does Navellier like? Thinkolator sez that this one is … Jazz Pharmaceuticals (JAZZ)
I don’t know much about this one — they also look pretty cheap, they’re a midsize pharma company (market cap around $1.5 billion, forward PE of about 11), and they did have a nice growth spurt in the last quarter — revenues were up 64%, and earnings were up an even more impressive 145% year over year. Analysts think they’re going to keep that up, with revenue growth topping 70% in 2012, so if that’s the case you can definitely make a valuation case for JAZZ at a bargain basement Price/Earnings/Growth ratio of 0.