Motley Fool’s “Best Stock of 2008”

By Travis Johnson, Stock Gumshoe, January 16, 2008

Ah, I’m back on the horse now after so many days of struggling with boring computer code … and now the Thinkolator can really get a warmup, because we have before us yet another epic tome of teaserdom in the form of a Motley Fool email.

This one’s trying to sell us “the unstoppable ‘multimedia powerhouse’ David Gardner believes can realistically double or triple your investment at least.” Sounds pretty good, no?

And all you have to do to find out the name of this millionaire-maker is pony up $99 for a subscription to Stock Advisor, the Motley Fool’s least expensive stock newsletter — the one that pits David against Tom to see which Gardner can make you richer. Apparently they’re also throwing in a copy of their annual Stocks 2008 review of their best picks, of which this particular one is the headliner.

Or there’s always the other option, of course — you could just keep reading, and the Gumshoe can certainly sleuth this one out for you.

Our clues?

“This business is just now entering a period of ABUNDANCE unlike any in its 71-year history.”

“It’s relatively small — with a total market capitalization of around $2 billion — in an industry where debt-leaden competitors are routinely valued in the tens of billions.”

What other clues does your merry Gumshoe get?

Our writer says that David Gardner tried to turn him on to this stock back in 2002, which he regrets because he missed out on a 730% return. Not bad for five and a half years.

And since the email is roughly 8,000 pages long, plenty more clues are supplied, along with plenty of reminders about the good picks the Gardners have made in the past.

A bit more, in their words:

This is a “tiny ‘multimedia powerhouse’ that’s revolutionizing a century-old industry. You might think ‘tiny’ and ‘powerhouse’ unusual bedfellows. That’s because up until now a lion’s share of the profits earned on this little company’s properties has gone to ‘big money’ backers. But that’s about to change.


“In a recent interview, the co-chairman revealed to us the company’s plans to apply the inside knowledge learned over seven years of making billions for other companies… and take over production. Obviously, this represents an epic shift in the company’s already super-high-margin, cash-generating business model — an extremely PROFITABLE shift!”

And that’s the real kicker of this stock idea: “You see, the company’s 100% success rate over the past five years paved the way for an extremely favorable financing arrangement … the up-front production money won’t have to be repaid unless the projects are a success — not a single penny.”

OK, I’m sold! Where do I buy?

Actually, your friendly neighborhood Gumshoe already owns shares of this stock. So it took only a few moments of warming up the ‘ol Thinkolator 4000 to determine that the Motley Fool’s “Best stock of 2008” is …

Marvel Entertainment (MVL)

Yep, the comic book company. I bought shares years ago partly because they seemed inexpensive and low risk (their business model, aside from the steady comic book publishing business, was built on licensing fees — essentially monetizing their intellectual property without taking any financial risk). To be honest, I also bought out of fond memories of my nights reading X-Men comics as a wee lad.

But I bought more this past fall, and more still early this year, for very similar reasons to those being teased here by the Motley Fool (if you want a taste of their reasoning, there are a few decent articles their reporters have done here in a bull/bear debate … and here when they called it a “screaming buy” … and one even stole David Gardner’s teaser headline by writing his own “best of 2008″ article about the fluorescent unitard set.

And to tell the truth, this is a ridiculously well-covered company, given its small size, so the research is certainly out there if you want to find it. The Fool covers them like a glove, since it has been one of David Gardner’s best picks since he chose it in 2002 as they finally started to come out of the morass that they slogged through when they were bought by Ron Perelman and went through bankruptcy in the mid-1990s. Gardner got it in the low single digits, and has recommended it several times since then, though I think this is the first time he’s recommended it at a price this high — the shares are now right around $24.

The basic bull argument, aside from the continuing success of licensing at Marvel with great Spiderman toy and movie revenues, and an expected good 2009 with the Wolverine licensed movie, is that they’re also taking a step toward self-producing their own movies.

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