Top Performer's Top Picks

09/23/2005 12:00 am EST

Focus:

Louis Navellier

Editor, Blue Chip Growth and Emerging Growth

When it comes to performance, Louis Navellier leads the pack. Among newsletter advisors, he has the enviable position of being at the top of Mark Hulbert's 20-year performance rankings. Here, we take a look at some of his current favorite stock picks.

"Wall Street is so stressed about so many different things that it hasn’t noticed that cash flow and corporate profits are at record highs," says Louis Navellier, in his Emerging Growth Letter. "The analyst community on Wall Street is grossly underestimating the market’s earnings this year. Earnings momentum for the S&P 500 will accelerate for the remainder of the year. The small- and mid-cap arena is even more attractive than the S&P 500 due to stronger earnings growth and lower P/Es.

"I must confess that I can’t predict the weather, but I’m pretty good at picking which stocks are going to have the strongest sales and earnings growth. Although the overall market may be floundering, this is a wonderful environment for good stock pickers. Our Buy List is well-positioned to benefit from institutional buying pressure. The average stock on the Buy List has very strong sales and earnings growth, combined with a low P/E ratio. Here are our three top-rated stocks:

"NutriSystem (NTRI NASDAQ) saw its latest quarterly earnings jump 470%, while sales rose 346%. The company also raised its full-year revenue target to $150 million to $155 million, which is a substantial increase over analysts’ expectations of $109 million. The stock is an outstanding buy. NTRI is a thinly traded micro-cap that should be approached with caution, so please only use limit orders! Buy below $27.

"CNS Inc. (CNXS NASDAQ) makes the Breathe Right nasal strip, which holds nasal passages open to help improve breathing. In the past four quarters, the company’s sales have increased over 26%, but its earnings have soared 1,350% due to dramatically expanding operating margins. The stock is a great buy. CNXS is a thinly traded micro-cap stock that should be approached with caution, so please only use limit orders! Buy below $30.

"Sociedad Quimica y Minera de Chile S.A. (SQM NYSE) recently announced that its second-quarter earnings nearly doubled due to higher prices and higher demand for fertilizers and industrial chemicals. The company is hoping that the growing trend in the use of battery-powered tools will help drive its sales of lithium and derivatives, which are already up 50% so far this year. The stock is a great buy below $130."

In his Blue Chip Growth Letter, the advisor adds,"This was the fourth quarter in a row when energy-related stocks posted the best earnings of any industry group, and it’s no coincidence that most of our top buys now are energy companies. We want to ride these companies as long as they have the best earnings. That’s been the case for the last year and should be for the foreseeable future. Here are our latest three top buys:

"Kinder Morgan (KMI NYSE) operates more than 35,000 miles of natural gas pipelines throughout the US. It also recently announced that it is buying Terasen in Canada for $3.1 billion to expand into the lucrative Alberta tar sand business that Terasen operates. Overall, KMI should be a wonderful addition to our Buy List. This is our first natural gas pipeline company, and you can’t have enough Canadian tar sand plays. I’m putting KMI in the conservative category. Buy below $99.

"PetroChina (PTR NYSE) produces two-thirds of China’s oil and gas. That’s saying something. It has proven reserves of 11 billion barrels of oil and 32.5 trillion cubic feet of natural gas. The company also owns or has interests in a huge number of gas stations—more than 15,000. It is only a matter of time before demand does soar, and PetroChina will be the obvious winner. PTR is attractively valued at the moment, trading at barely 11 times forecasted earnings—despite posting almost 48% earnings growth in the past year—and has an extremely attractive growth to P/E ratio. It’s a conservative buy under $88.

"Sunoco (SUN NYSE) operates five refineries, which have a combined processing capacity of 900 thousand barrels of crude oil a day, as well as 4,300 miles of pipelines and 38 terminals. The firm markets its gasoline through more than 4,800 retail outlets, primarily in the Northeast and upper Midwest. SUN shows no signs of slowing down, and you just can’t have enough refinery stocks in your portfolio right now. Oil prices may continue to gyrate, but refineries are poised to post strong earnings regardless of the price of oil. SUN is a moderately aggressive buy under $68."

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