Lots of questions about this one, so as I run out to a meeting today I’m re-releasing it for you — Navellier’s pitch is in heavy circulation again, and the ad is still touting the same stock as his similar ads of a month ago. The article below first ran on July 16, when the stock was a bit over $20 — it dipped a bit going into earnings, then had another mild earnings beat and gave guidance that had analysts boosting their estimates very slightly and bounced back up, then has more recently been on the decline (including today), and the stock now sits about a dollar below where Navellier teased it last month.
Apparently his enthusiasm has not changed, so my teaser-solution article below is also unchanged … I’ve added a brief note at the bottom, and have also appended the original comments from last month for your information. Enjoy!
–following originally published 7/16/15–
Louis Navellier has a new pitch out for a “wireless electricity” stock — one that he says is on the cusp of a revolutionary change that will lead not only to a world where you can charge the devices in your home without power cords, but a world without power outages as transmission lines are replaced by wireless technologies.
Sound exciting? Of course! And almost all technological things seem feasible in the abstract, particularly when you consider that most Americans were wowed by radios 100 years ago, and color television was still quite new 50 years ago… to say nothing of the huge difference that the mobile internet has made in most of our lives in just the last five years.
So what’s he recommending that’s so secret he can’t tell you until you subscribe? Let’s check out the clues … this particular ad, unlike most, didn’t have a “transcript” version, so I actually had to listen to the whole dang thing. This is the surest sign possible of my love for you, dear irregulars — sitting through a full “video” presentation is a special form of torture, even if it was only twelve minutes.
The basic spiel?
“When I think how this little company’s emerging technology could change how power is transmitted in the world, the investment potential give me goosebumps.”
That’s Navellier getting the goosebumps, of course — not yours truly. I save my goosebumps for more auspicious occasions, like birthdays and anniversaries.
And he says that this kind of change would be akin to investing in Amazon or Apple in the early days…
“This company could follow in the footsteps of Apple and Amazon and turn $1,000 into $200,000 or more.”
Those numbers are based on 20 years, it appears — that’s about how long it has taken for AMZN and AAPL to return 2,000% (Amazon has been much more volatile, but their returns over the last 20 years are extremely similar).
And the ad points out that both of those stocks saw dips of 20% or more early in their public lives, when investors “jumped ship” and didn’t realize how revolutionary these companies would be… and, more from the ad…
“I expect most investors will miss the potential in this little company’s wireless power technology, too.”
Navellier also says his Emerging Growth advisory has beaten the market 6-to-1 in the last 16 years — I assume there’s some real performance number that he’s using (and has run by his lawyer) to claim that kind of performance, but the numbers from Hulbert are much different (Mark Hulbert tracks the portfolios of a couple hundred investment newsletters, including a couple of Navellier’s, and he says Emerging Growth has posted an annualized 0.3% return over the past 15 years. The S&P has not done great over the last 15 years, with a 40% return, but that’s still 2.25% annualized.
(This is not entirely fair — Hulbert’s numbers were for the 15 years ended December 2014, the S&P numbers I took are from this month, but that wouldn’t sway it that dramatically)
To be fair, Navellier’s Blue Chip Growth — which buys large cap stocks and is much cheaper ($150 vs. $995 for Emerging Growth) — has beaten the broad market over the last 5, 10 and 15 years. (Hulbert compares to the Wilshire 5000, not the S&P 500, but the numbers wouldn’t differ dramatically — the Wilshire is up 53% in 15 years, versus 40% for the S&P 500.)
But, of course, we all know that the performance claims of most newsletters are based on their favorite winning stocks, or on “open” positions to ignore the “stopped out” stocks, not on any kind of real portfolio return that an investor might be able to emulate. We’re just looking for some stock ideas, right?
So what’s the idea this time for this “easy double?”
Here are our clues:
135,000% earnings growth…
“This company has carved out a critical niche as an innovator in wireless infrastructure and wireless power and receive transmitter solutions”
HTC, Samsung and Kyocera are apparently integrating “this kind” of wireless power technology.Are you getting our free Daily Update
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He mentions lots of other possibilities for wireless power, with hotels and restaurants considering integrating it, car companies thinking about how to use it, and hospitals and manufacturers will be using it to reconfigure their electronics to have a “cleaner” setting without masses of cables. To say nothing of fixing or replacing the aging power grid.
And as Navellier always does, he drops some names…
“This is why big institutional investors like State Street, BlackRock and Vanguard have suddenly become very interested… and have already scooped up millions of shares of our company’s stock”
Those are among the largest indexed money managers with their index funds and ETFs, so that probably just means that this little stock is in an index — not that those particular institutional money managers have sussed it out as a hot pick. And, of course, it’s hard to find a company of any size where those big institutional investors haven’t “scooped up millions of shares.”
But I digress. Any more clues?
Not really, but one last “promise” from Navellier:
“If you hold on for the longer term, five to 10 years, and this company revolutionizes teh wireless industry the way Apple revolutionized smart phones and computers… a $1,000 investment could grow well into six figures.”
So this company has “already left the launch pad” and Navellier thinks that getting in now will give you an easy double by the end of the year. What is it?
Thinkolator sez we’re being teased about… Integrated Device Technology (IDTI)
Which did, in fact, post an incredible-sounding earnings growth number of 135,000% last quarter — though that’s mostly just a math anomaly, it so happens that they went from earning two hundredths of a cent per share in the first quarter of 2014 to reporting earnings of about 29 cents in the first quarter of this year. That isn’t so terribly shocking for a company that’s just bouncing back to profitability after a few bad quarters, and it was more or less what the market was expecting (they beat earnings expectations by about 11%, they’ve been consistently beating expectations by similar margins over the past year). The more realistic view of the company’s growth probably comes from revenues and analyst estimates — the average estimate is for 10% revenue growth this year and 16% next year, and they think that the company will post profit growth of about 38% each year for the next five years.
And that represents a comeback, of sorts — IDTI has seen declining revenue for most of the past seven years, until this past year, when margins improved considerably by cutting both operating costs and R&D as a percent of revenue (really, just by keeping those numbers mostly flat while revenues grew). I’m no expert on this company, but it’s encouraging that they’ve finally gotten some revenue growth going — the first glance makes it appear that they were probably getting a lot of their revenue from the desktop/laptop computer segment five and ten years ago, so there’s been some adjustment to cope with declining demand from that segment as they’ve built up revenues in communications and power management and gotten design wins in more attractive mobile and higher-end devices.
Their wireless charging technology is not going to change the world in the next six months, and it’s far less “revolutionary” than the wireless charging networks designed by previously teased Energous, from what I can tell, but they are certainly further along in commercializing them… and, perhaps more importantly, they’re selling chips and maki