“Obama and McCain’s Favorite Company?” Navellier

By Travis Johnson, Stock Gumshoe, September 12, 2008

Louis Navellier believes that our wildly entertaining presidential candidates have at least one thing in common: Their administrations will both push for the kinds of policy changes that will make one particular stock shoot for the stars.

Not bad, eh? I’ve seen dozens of emails about preparing for President McCain, or panicking about President Obama, most of which are simply pointless — but this one claims that we can win with this stock no matter who wins the White House in November. That sounds appealing, no?

Navellier, in fact, calls this the “Perfect Stock for President McObania … but you’d better buy it now”

It’s a cute ad — Louis even went so far as to write a speech for the candidates:

“I’ve even written the campaign speech that either Senator McCain or Obama could deliver. Whichever candidate does it first will get elected by a landslide.

“Here it is:

My fellow Americans. Elect me and I will double, no I will triple the miles you get to the gallon in the car or truck you currently own. (Applause)

Elect me and every car will get at least 40 miles per gallon, just with one simple modification, the cost of which my government will subsidize! (Hearty applause)

“Elect me and I will cut carbon emissions by 25% in a single stroke!! (Loud applause)

“Elect me, my fellow Americans, and I will drop your fuel costs from $3.75 a gallon at the pump to $1.90 or less!!! (Wild applause)”

OK, so I’m still intrigued — better mileage, cheaper fuel, government subsidies. Sounds familiar, sure, but it also sounds like a company that might have some promise.

So what is it?

Well, we do get a few specifics:

“Is it any wonder that the stock’s up 480% in 5 months?

“Or that T. Boone Pickens has a stake?

“Or that companies that run fleets of trucks are standing in line to convert to this system?

“Or that GM and Ford want to provide the company’s aftermarket conversion kits?

“Is it any wonder that the stock gapped up almost 29% recently in a SINGLE SESSION?”

You might guess from this that yes, Navellier’s picks are not generally for the faint of heart — it can be hard to buy a stock after it has already gone up this dramatically in a short period of time.

And in fact, the last time he predicted a short-term big pop in the price of this stock, he was far too optimistic.

But I can, at least, give you the name of Navellier’s secret company for President McObania …

This, though some of the teases above are misleading, is Fuel Systems Solutions (FSYS)

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The big spike of 29% was in early August, after they released spectacular blowout earnings. And indeed, for much of the past month they have been seeing big spikes up in price on unusually high volume, which is exactly the kind of thing that gets Navellier all hot and bothered, with most of that spiking due to two blowout performances in their last two earnings releases.

And I do mean blowout — they have shocked analysts recently with their extremely good numbers, so this is a momentum stock with few peers. And yes, it has really gone up by something like 480% recently — you could have bought shares for $10 back in March, and it came near $60 a few weeks ago (it’s still way up there, shares are around $53 as of the last close).

As far as I know, T. Boone Pickens doesn’t own shares of this one, however. It wasn’t included in his latest 13F, though it’s certainly possible that he bought it since that filing date.

He does own shares of Clean Energy Fuels and Westport Innovations (I also own that second one), and Westport could be called a competitor to FSYS in some ways.

Fuel Systems Solutions is focused on components and kits for converting conventional vehicles to run on natural gas, essentially. They sell to fleets and manufacturers worldwide, and they’re clearly in a pretty sweet spot. I personally prefer Westport, which I own, (because of some big orders they are in the process of getting and because they have a great partner in Cummins and some anti-pollution based potential that is not dependent on gas prices), but that preference has been wrong so far — FSYS has dramatically outperformed WPRT.

Navellier has teased this stock before, and touted it for some time. Last time, he was promising that the stock would double in a matter of days. The promise was that this was a “$32 Fuel Conversion Stock that would double to $64 by July 7,” and I took the opportunity to poke fun at the ad — this was one in a series of ads he ran over the Summer that promised that a particular stock would double within a week or two, and of course that never happened and he probably didn’t believe it would happen, either.

But I’ll give him credit — it was certainly a good stock pick at $32, as long as you didn’t really believe you were getting a double within a week or two. You would have had to sit through a bit of a decline in the share price, but if you held for a month or two you’d be happy indeed … and while you wouldn’t have quite doubled your money, you could have come awfully close to that. So the ad was ridiculous, but the stock pick in this case turned out to be a good one (don’t get me started on the other stock he used this “double in a week” scheme with, Gran Tierra Energy — that one has just about halved, not doubled).

If you’d like to learn more about FSYS, it has been a well-covered “wonder stock” of late — there was an article in SmartMoney back in the middle of the stock’s huge run, and folks on SeekingAlpha have seen it both ways — as a huge upside surprise winner, and as a stock that then became a bit overvalued. How you feel about this one will depend a lot on your investing preferences — this is one of the best performing stocks of the year, so it has been a great investment. It’s in a hot sector, but expectations are no longer going to be low and timid for these guys — it will be interesting to see if they’re able to wow the analysts again when they report earnings in a couple months.

Whaddya think? Do you believe in the Pickens Plan and the worldwide trend toward more natural gas vehicles? Will FSYS be the winner in the end, or is it too expensive? All of these companies are pricy based on earnings, but Fuel Systems Solutions, unlike Clean Energy Fuels or Westport, is currently profitable … hard to argue with that, even if oil prices are going down.


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