Two Blue-Chip Growth Stars

06/28/2007 12:00 am EST

Focus:

Louis Navellier

Editor, Blue Chip Growth and Emerging Growth

Louis Navellier, editor of Blue-Chip Growth, finds a casino operator and refiner he thinks will show strong appreciation over the coming year.

This month I've selected companies that are very resilient and have posted excellent first-quarter earnings. I expect to see tremendous growth from both new Blue Chip Buys.

MGM Mirage (NYSE: MGM) MGM Mirage is one of the world's leading hotel and gaming companies. The company owns and operates casino resorts in Las Vegas, [including] Bellagio, MGM Grand Las Vegas, Mandalay Bay, and Mirage. MGM [also] operates properties in Mississippi, Michigan, and Macau and is currently building a new MGM Grand hotel and casino complex in downtown Detroit. The company also signed an agreement to build a non-gaming luxury hotel in the People's Republic of China.

MGM's first-quarter earnings were the best in [its] history. Diluted earnings from continuing operations were [55 cents] per share, a 15% increase over 2006. Net revenues for the first quarter increased 9% to $1.9 billion. These revenues were [aided] by strong room pricing at the Las Vegas Strip resorts, the reopening of Beau Rivage in August 2006, and the continued impact of new restaurants, nightclubs, and shows at several resorts. And the Mirage's future looks solid: it recently formed a new division, MGM Mirage Hospitality LLC, which will focus exclusively on extending its hotel brands and developing new luxury hotel brand concepts.

Gaming hotels and casinos are never going to go out of business. Just like the stock market, people like to gamble for the chance of a big payout. MGM is a great company with lots of growth in their future. I highly recommend them as a buy this month. Buy below $95. (The stock closed slightly above $83 Wednesday—Editor.)
 
Tesoro (NYSE: TSO) is an independent petroleum refiner [which also sells] refined products in bulk and wholesale and motor fuels and convenience products in the retail market through its 460 branded retail stations in 18 states. Tesoro owns and operates six petroleum refineries, located in California, Alaska, Washington, Hawaii, North Dakota, and Utah.

Tesoro has seen an outstanding first half of the year. For 2006, the company reported net earnings of $369 million, or $5.25 per share. Their debt-to-capital ratio is 32%. This establishes a tremendous financial platform for future growth and success. Given an improved capital structure and significant free cash flow, Tesoro plans to spend more than $1 billion in capital projects. Even better news is that Tesoro repurchased 1.6 million shares of common stock for $98 million and doubled the quarterly dividend it initiated in 2005. There's nothing we like better than juicy dividends!

When a company buys back their shares, it shows growth and confidence in their future operations, and no doubt we'll see the gains soar on this one. Tesoro is a great buy below $70. (It closed below $57 Wednesday—Editor.)

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