Navellier: Crème de la Crème

11/01/2002 12:00 am EST

Focus:

Louis Navellier

Editor, Blue Chip Growth and Emerging Growth

Louis Navellier uses a proprietary grading system covering 5,000+ stocks. He says, "We cover quantitative criteria which measures institutional buying pressure. We also measure important fundamental variables, such as cash flow, return on equity, earnings revisions and surprise history, momentum, quality, and profit margin expansion. The crème de la crème go in our newsletters." Here is his market outlook from the Opening Ceremonies of The New York Money Show and the Top Five Buys for November from his Blue Chip Growth Letter.

"We’re obsessed with 'oasis-type' stocks that should continue to go up regardless of the rest of the market. This is really a wonderful time. It’s probably the best buying opportunity I will see in my lifetime. The large-cap stocks in our portfolio have averaged over 50% earnings growth over the last year, yet they are trading at just 18 times forecasted earnings. Those are phenomenal ratios.

"A variety of forces have converged to really help this market over the near term. The sharp rise in bond yields is causing a panic of people returning to the stock market. You don’t want to own bonds in a rising interest rate environment. This is an incredible catalyst for rising stock prices. We’re also now hitting the seasonably favorable period where people will be funding pensions and IRAs. That has me very excited. And the third year of the presidential election cycle (such as we will see in 2003) is also very strong historically, for obvious reasons. By the time the third year of a term rolls around, they start to focus on getting reelected. In the past, we have seen 80%+ rallies during these periods. That’s very, very bullish."

Each month in his Blue Chip Growth Letter, Louis Navellier narrows down his buy list to a select group of the Top Five Buy candidates. Here are his current Top Five Buys for November:

"1) Last month, I upgraded Dell Computer (DELL NASDAQ) from a hold to a buy and made it a top five selection. I am doing so again this month. Dell's volatility has begun to settle down some. Look for Dell's earnings report in mid-November.

2) Lennar (LEN NYSE) has been a surprisingly resilient stock. While so many stocks have crashed through important resistance levels, this Miami-based homebuilder has stayed above $50 a share for almost the entire year. The good news keeps coming from Lennar. The company beat estimates for the third quarter by a penny. Plus, it raised forecasts for this year and next. Lennar's new targets for annual earnings per share for 2002 and 2003 are over $0.50 more than Wall Street was expecting.

3) Last quarter, I was concerned about Progressive (PGR NYSE) after it missed analyst estimates by a few cents a share. Fortunately, I decided not to sell the stock. Like many other stocks, it was hit hard in July. But Progressive is still a high-quality, low-volatility issue. The good news is that its business is back on track. For the third quarter, Progressive's earnings were $0.87 a share, which was $0.05 more than analyst estimates.

4) I'm putting UnitedHealth Group (UNH NYSE) back on the Top Five list this month. This is UnitedHealth's fourth appearance in the last six months. On October 17th, the company reported earnings of $1.12 a share, beating Wall Street's estimates by $0.08 a share. The stock has rallied strongly and is close to its all-time high, reached in June. Since first being recommended in November 2000, the stock has gained 92%.

5) I often say that only 15% of all stocks will lead the market higher. I think WellPoint Health (WLP NYSE) is a perfect example. To be honest, I think I made a mistake not recommending this stock earlier. I recommended buying it near its high this spring, and the stock then pulled back by 18%. But like many 'silver lining' stocks, it refused to lie down. We now have a 7% profit. I rate WLP a conservative buy below $93."

Special Notice: Investors can now check the health of their personal portfolio holdings using Louis Navellier’s stock grading system. It is available free at PortfolioGrader.com, and it will provide you with ratings of A through F on a variety of fundamental and quantitative variables covering over 5,000 stocks.

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