Chaos at Lehman Brothers

June 12, 2008

Wall Street was stunned today by the chaos at Lehman Brothers (LEH). A few days ago, the bank reported an astounding loss of $2.8 billion. Then the firm said it was going to raise $6 billion in fresh capital. That wasn't enough to satisfy shareholders so today Lehman announced that it's replacing its COO and CFO.

Fortunately, we spotted the troubles at Lehman early on with the aid of my stock-rating tool PortfolioGrader Pro, which rated LEH as a Sell. I hope you took our advice then and steered clear of Lehman, especially considering that the stock has lost half its value in the past month.

The health of the economy is heavily dependent on the willingness of banks to lend cash to consumers and businesses. Many financial companies like Lehman have already taken substantial losses thanks to the credit crisis, and have to pared their lending or raise new capital to rebuild their safety nets. Lehman's troubles are just the most recent sign that the financial crisis isn't over, and it shows: Yesterday, the Dow plunged over 200 points on the heels of Friday's 395-point nosedive. Since May 2, the Dow's lost nearly 1,000 points.

Three Cheers for Stagflation!

Don't worry; I haven't lost my grip on reality -- at least not yet.

This environment of sluggish growth and soaring commodity prices is conducive to our style of investing. My Blue Chip Growth Buy List is filled to the brim with companies that are profiting from food, energy and steel inflation. Two of my Blue Chip Growth stocks are up more than 360% since we bought them, and one is up more than 220%! Who says you can't make money in the current market?

We've profited handsomely from this persistent stagflation and this week I'm going to show you how to continue to do so. I'm in the process of writing the July issue of Blue Chip Growth and I want to give you a preview of what I'm telling my subscribers.

Before I jump into the gritty details, I'd like to invite you to join Blue Chip Growth as a full-time subscriber. You can sign up today for a one year-subscription for just $149 -- that's half off our regular price. Blue Chip Growth is a great service for investors who may be new to the market or can't decide where to commit their finances in this environment. I have so much confidence that you'll love this service, I'm willing to offer you a money-back guarantee. That's right, if the returns you yield at Blue Chip Growth fall short of your expectations within the first six months, I will guarantee a 100% refund. You literally have nothing to lose, so join us today!

The July issue of Blue Chip Growth will be mailed to subscribers on Monday. Of the four new buys I recommend, two are in the lucrative fertilizer business. The other two new buys are an energy stock and a tech stock. What I really like is that our new buys this month are inexpensive. All four of the new stocks trade at less than 11 times this year's earnings.

The specific company information will be available to subscribers through the issue Monday. But I will offer up a preview of the new recommendations:

Our Four New Blue Chip Growth Buys for July

New Buy #1 is a top producer and marketer of fertilizers in North America. As a leader in the production of nitrogen, the company operates plants in Canada, the United States and Argentina. Its main product-line is nitrogen fertilizer; however, the company also produces potash and phosphate products. These plants have the capacity to yield more than eight million tons of these nutrients per year. In addition to supplying wholesalers, the company operates more than 400 fertilizer retail outlets in the United States and South America.

New Buy #2 is a regional agricultural firm that manufactures and markets nitrogenous and phosphate fertilizers (including diammonium phosphate or DAP). The company operates a network of manufacturing and distribution facilities, primarily in the Midwest, through which it offers products worldwide. The company changed its structure from a cooperative to a holding company when it began to trade publicly in 2005.

New Buy #3 looks for oil and natural gas and has ample reserves. The company produces and markets in the United States and internationally. Its U.S. operations are on the west coast, Rocky Mountain, the Great Plains and the Gulf Coast region. Its international operations include onshore and offshore activities in the Asia/Pacific region, the Middle East, South America, West Africa and the North Sea. The company has proved reserves of about 3.3 trillion cubic feet of natural gas and 329 million barrels of oil.

New Buy #4 is one of the largest independent makers of hard disk drives, which record, store and recall volumes of data. Drives for personal computers account for most of its sales, although the company also makes devices for entry-level servers and home entertainment products. The company sells to manufacturers and through retailers and distributors. About half of its sales are to manufacturers, with Dell accounting for 10% of its sales. I think this one could be a break-out winner for us.

What to Do Now

The recession chatter is rising, but our Blue Chip Growth stocks are acting as an oasis amidst Wall Street's chaos. Thanks to high oil prices, the worst business environment in decades for banking and housing now includes the airline and auto sectors. Unfortunately, I expect the problems at Lehman Brothers won't be the last.

No matter how you slice it, we're in a stagflationary environment. But at Blue Chip Growth, we continue to be well-positioned for the chaos that has gripped the global economic scene.

Not only have we outperformed the market three-fold over the past decade, we've done so without taking undue risk. At Blue Chip Growth, our goal is to help investors "live well and sleep well." We've beaten the market in eight of the past ten years, and we're on track to do it again this year. That's why the July issue is so crucial: because we're adding four new buys, all designed to profit from stagflation.

So if your neighbors are wondering why the current market troubles aren't driving you crazy, let them know it's because you've been making money. Sign up for Blue Chip Growth today!

That's it for this week. I'll have the next issue of "What's Working on Wall Street Now" next Monday, June 19.

Sincerely,

Louis Navellier

P.S. The July issue of Blue Chip Growth goes out on Monday, so sign up now to profit from inflation, instead of getting squeezed by it. Given the market's latest troubles, you don't want to be left behind.