Navellier Growth: your source for market-beating growth stocks

Thanks, Benny. You’re doing a heckuva job!

Yesterday, the Federal Reserve cut interest rates by 0.25%. This brings the Fed Funds rate down to 2%, which is the lowest level in four years. In a little over seven months, the Fed has slashed rates by 3.25%. That’s some of the most aggressive easing on record.

But I’ll tell you what the important news is. No, it’s not the fact that the Fed cut rates. Everyone knew that was coming. The real news came in the Fed’s post-meeting statement. That’s what I was waiting for.

The Fed’s Job Is Done

In yesterday’s Fed statement, the central bank did something it hasn’t done in a long time. Bernanke & Co. implied that they’re basically finished with their rate cuts. Of course, you have to be a specialist in translating the bizarre foreign language known as Fedspeak to understand the message, but it was there.

I used to work at the Fed, so I can help translate this strange language for you. If you’re not fluent in Fedspeak, it’s simply the attempt to convey as little information as possible while using as many words as possible. It’s more art than science. Put it this way: If the members of the Fed were held as prisoners of war, the enemy would have no trouble getting them to speak. The hard part would be getting them to stop.

Part of yesterday’s Fed statement said:

The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time and to mitigate risks to economic activity. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.

That may not sound like much to the untrained eye, but the key word here “substantial.” That hasn’t been there before, and it’s an indication that the Fed realizes how much they’ve cut so far.

This is really very good news for investors, and it’s a strong cue from the Fed for investors to get back in the market. I really doubt the Fed is willing to cut any more, particularly since there were two dissenting votes on the last two rate cuts. The Fed has basically done all it can do; now it’s up to consumers, businesses and investors to start spending.

The Fed has to walk a delicate balance between helping the economy and helping the dollar. Until now, the Fed has sacrificed the dollar to help ease the credit crunch. That game plan has come to an end.

From here, the dollar will probably rally, but the real stimulus will come from investors. There’s over $3.5 trillion sitting in cash, and 2% interest isn’t very rewarding. Eventually, that mountain of cash will find its way back into stocks, so let’s be there waiting for it.

So What Kinds of Stocks Should You Buy?

That’s easy: You should focus on companies with the strongest earnings growth and rock-solid fundamentals, just the sort of stocks I recommend in my Emerging Growth service.

In last week’s issue of “What’s Working on Wall Street Now,” I highlighted two of my favorite Emerging Growth stocks to watch this week, Ducommun (DCO) and Gen-Probe (GPRO). I said that both were strong buys.

I hope you took advantage of my advice. On Monday morning, Ducommun reported earnings of 49 cents a share, five cents better than Wall Street’s expectations. The stock quickly jumped 4.3% in Monday’s trading.

Gen-Probe (GPRO) reported after the bell on Monday, and its stock jumped 5.5% in Tuesday’s session. Not bad for one day’s work. The company earned 58 cents a share, eight cents more than expectations. Gen-Probe also raised its earnings guidance for the entire year.

In a chaotic environment like this, sometimes I think it’s too easy for me and my Emerging Growth system. This is exactly the sort of market where investors crave superior fundamentals. Already this earnings season, my Emerging Growth subscribers have seen massive one-day rallies in stocks like Deckers (DECK), up 21.5% in one day, and Exponent (EXPO), up 18.8% in one day.

In case you missed out on any of those big gains, I want to repeat the extraordinary offer that I made to you last week. You can sign up now for a three-month subscription to Emerging Growth for $295. Please don’t let this opportunity pass. The Federal Reserve has given all investors the green light to go back into stocks. Don’t ignore their buy signal!

Remember you can test-drive my Emerging Growth service risk-free. If you don’t like Emerging Growth, or the results simply don’t match your expectations, you can cancel at any time within the first 90 days and get all of your money back. That’s how much faith I have in our research. This is a great opportunity to take control of your investing future, so I hope you join us today.

That’s all for this week. I’ll have the next issue of “What’s Working on Wall Street Now” next Thursday, May 8.

Sincerely,

Louis Navellier