Louis Navellier's Market-Beating Stock Picks

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Includes: AVGO, AZO, BCE, BIDU, CMG, CMI, CRM, CTSH, CTXS, DE, F, FDO, FFIV, IBM, INFY, LVS, MCD, MJN, MRK, NTAP, PCP, SID, SPY, TCK
by: Insider Monkey

Navellier & Associates was founded in 1980 by Louis G. Navellier. Based in Reno, Nevada, the firm focuses on growth investments. Navellier is the editor of four investment newsletters, Blue Chip Growth, Emerging Growth, Global Growth and Quantum Growth. Louis Navellier also authored a Business Week best seller, “The Little Book That Makes You Rich”.

Louis Navellier uses a system that grades stocks. For the past 13 years his “A” graded stocks returned 1267.9% vs. SPY’s 61%. His stock picking formula consists of two factors: fundamentals and buying pressures. He thinks fast growing firms are healthy, thriving and well managed. He uses technical indicators to measure buying pressures to time entry points for these healthy, growing stocks.

Navellier had 285 stocks in his portfolio at the end of 2010. Fifty-eight stocks were added last quarter and he completely sold 43 stocks. He makes aggressive investments in small-cap firms and has a high portfolio turnover. Insider Monkey, your source for free insider trading data, summarized the performance of Navellier’s 20 largest positions. These are his longer term investments:

20 LARGEST POSITION

VALUE (MILLION $)

% CHANGE IN HOLDINGS

RETURN*

NetApp Inc. (NASDAQ:NTAP)

73.64

-4%

16%

F5 Networks Inc. (NASDAQ:FFIV)

71.82

-4%

9%

Broadcom Corp. (BRCM)

71.79

-4%

23%

Baidu.com, Inc. (NASDAQ:BIDU)

68.95

-30%

16%

Teck Resources Ltd. (NYSE:TCK)

67.68

-3.6%

56%

Cognizant Technology Solutions (NASDAQ:CTSH)

65.91

-4%

17%

Salesforce.Com Inc. (NYSE:CRM)

65.30

-5%

22%

Autozone Inc. (NYSE:AZO)

65.18

16%

11%

Cummins Inc. (NYSE:CMI)

58.48

16%

20%

International Business Machine (NYSE:IBM)

58.47

-4%

21%

Infosys Technologies Ltd. ADS (NASDAQ:INFY)

57.88

-4%

2%

Family Dollar Stores Inc. (NYSE:FDO)

55.83

34%

-5%

Chipotle Mexican Grill Inc (NYSE:CMG)

54.26

16%

31%

Mead Johnson Nutrition (NYSE:MJN)

54.11

20%

1%

Ford Motor Co. (NYSE:F)

53.34

17%

29%

Deere & Co. (NYSE:DE)

52.85

19%

35%

Precision Castparts Corp. (NYSE:PCP)

52.72

-5%

13%

Mcdonald's Corp. (NYSE:MCD)

52.59

18%

-1%

Citrix Systems Inc. (NASDAQ:CTXS)

52.25

-4%

-4%

Las Vegas Sands Corp. (NYSE:LVS)

50.87

-4%

39%

Click to enlarge

*The last column in the table shows each stock’s return since the end of the September. Weighted average return of these 20 stocks was 17.75% vs. 14.45% for the SPY. The performance of these stocks is actually impressive but it isn’t as high as Navellier advertises. He has some common holdings with other successful hedge funds. David Tepper’s Appaloosa has BRCM shares in its portfolio. Value investor Mohnish Pabrai has Tech Resources Inc (TCK) in his portfolio, and Stephen Mandel had more than $600 Million invested in Cognizant (CTSH). Brevan Howard, along with several other hedge funds, has Mead Johnson (MJN). Jim Chanos, however, is short Ford (F) and F5 Networks (FFIV) is one of the stocks Wall Street analysts expect to fall the most.

During the last quarter, Navellier added BCE Inc to his portfolio with a $40 Million investment. Since the end of December, BCE returned 3.38%, underperforming SPY’s 3.77%. His sales were more timely. He sold $44 Million of Companhia Siderurgica Nacional (NYSE:SID), which underperformed the SPY by 1.7 percentage points. He also sold $30 Million of Merck stock (NYSE:MRK), which actually lost 6.2% since the end of December.

Overall, Navellier has done a good job since the end of September. Fourteen of his 20 largest positions beat the SPY by a decent margin. Outsiders might benefit by monkeying his longer term large investments. We don’t think his portfolio can generate a 1000+% return in 13 years but he might be able to beat the market by a decent margin. We will follow his future performance more closely.

Disclosure: I am long SPY.