“$3 Tea Party Stock to Hit $6: Buy Monday!”

By Travis Johnson, Stock Gumshoe, December 21, 2009

Louis Navellier is at it again, telling us that he’s found another hot momentum stock …

“Grab it Now Before it Delivers another 400% Earnings Growth”

But today’s note from your friendly neighborhood Stock Gumshoe is as much a cautionary tale as it is a deciphering of a Navellier teaser — I’ll tell you the name of this stock, sure, but I’ve also told it to you before, because Louis has teased it before.

Unfortunately, the last time Navellier teased this stock he called it a “$4 Doubler” that would “hit $8 with or without you.” So the fact that it’s now a $3 stock that will hit $6 is, perhaps, a little disappointing.

The pitch Navellier uses this time is also almost exactly the same — he talks about how he’s only about making money, he’s not “politically correct.”

“I’m Louis Navellier, and if you know anything at all about me, then you know this: I don’t invest in a stock based on any kind of ‘political correctness.’

“No way.

“I ONLY invest in stocks that are:

“1. Riding the trends and,
“2. Making money and making my readers rich.

“To be sure, I hold a number of GREAT alternative energy companies that are making money hand over fist.

“But I don’t own them because of their ‘greenness!’ I own them because of their greenbacks!

“If you’re a politically incorrect greenback investor, as I am, then you’re going to love my fast- rising $3 Tea-Party stock.

“The reasons are simple: It’s on the verge of another blow-out quarter, shaking up the politically correct establishment and doubling investors money along the way.”

Navellier also says that some very unpopular politicians (I guess they’re pretty much all unpopular right now, technically) “bristle” at this company’s success … as if we’re foolish enough to say, “Hey, I hate them too, let me subscribe to your newsletter!”

And he tells us, like he did last time, that it’s “on the verge” of another blowout quarter:

“If My Politically Incorrect Doubler Doesn’t Jump at Least 50% After It Declares Earnings—You Won’t Pay a Dime

“That’s how confident I am that this one has winner written all over it.

“If I’m right, you could easily find yourself 50% richer in the blink of an eye. If I’m wrong, simply get your money back.

“The best part: You have 60 days to watch it double before you make your ultimate decision.”

(An aside, this company probably won’t release earnings until the second week of March, if they keep to their pattern — which is, conveniently enough, a hair past that 60-day guarantee … so this serves as a reminder that they probably just copied this text verbatim from the last time they used the teaser, when that 60 days would have encompassed the last earnings date).

Just to square the circle here, I’ll include the clues he noted in this ad:

“The company has …

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  • Registered 447% earnings growth last quarter
  • A forward P/E ratio of—get this—just 8
  • A market cap of under $262 million
  • Handed investors 90% gains year to date
  • One of the strongest buy ratings of any of our stocks, and
  • Is about to clobber Wall Street and double investors’ money again.”

But yes, this is, again, Smith and Wesson (SWHC — free trend analysis here … hint: it ain’t pretty right now) — and it looks like the marketers and Louis himself might not actually be on the same page, this was a top-rated stock in Navellier’s proprietary system a few weeks ago, having jumped up to an “A” for most of the Fall, but two weeks ago it bumped back down to a “B” rating.

Why, do you reckon? Largely because SWHC’s grade for “analyst estimate revisions” is now an F … which, in turn, is because when they released earnings a few weeks ago they backpedaled on expecations for next year, and analysts have been slashing their estima