Navellier Growth: your source for market-beating growth stocks

 

The carnage continues in the financial stocks, pretty much all around the globe. It seems almost every day we hear news about another major loss and asset write-down from a leading financial institution. Merrill Lynch (MER) has written down almost 18 billion, nearly half the company's equity at the end of June. Citigroup (C) has written off everything but the kitchen sink but still has a $37 billion exposure to risky subprime mortgages. So far, the company had to get over $14 billion in foreign investment to stay afloat.  Sallie Mae reported a loss for the fourth quarter of over $1.6 billion. Bank of America (BAC) announced profits fell 955% as they wrote off $6 billion of high-risk assets. Everywhere you turn there is disaster in the financial sector, and it has weighed heavily on the stock market. It got so bad the Fed had step in with a 1.25 basis point cut in interest rates in January just to keep some of these institutions afloat. This just might be the best thing that can happen to us as growth stock investors!

It is simple, really. Although the ever-increasing bad news out of the financial stocks has created quite a bit of turmoil of late, making the market's ride quite bumpy, eventually investors will have a fundamental question to answer. Where do I put my money now? Not in financial or value stocks as credit has dried up, making these very unattractive. Bonds are a poor choice with low yields. Cash returns are miniscule. So what do you do? The answer is simple in my mind: More and more investors, especially the large institutions that create the buying pressure that can drive stocks higher, are going to look for companies that have strong earnings growth and are prospering in the economic environment. What companies are doing that? The type of growth stocks we own!

Monsanto (MON) and Mosaic (MOS), two of the agricultural companies on my Blue Chip Growth Buy List, have already reported incredible earnings gains and talked of continued strong sales and earnings well into 2009. Another one of my Blue Chip Growth picks, Research in Motion (RIMM), has already reported very strong sales and earnings growth for the year. AK Steel (AKS), one of my Emerging Growth stocks, had a phenomenal quarter as well earnings over $106 million after losing money in 2006. And that's just to name a few.

Our growth stocks continue to show very strong earnings growth and score well on all eight of my fundamental variables. With value out of favor, interest rates low and going lower, the investment of choice is going to be these well run profitable companies that continue to grow no matter what the economy is doing!

Best of all, from our viewpoint, the financial stocks with their disastrous string of reports has done us an incredible favor by dragging down the overall market's valuations in recent weeks. They have made these incredible companies available at fire-sale prices. As the Fed continues to cut rates, the economy and stock market are going to get back on track in a relatively short period of time. When this happens, the sell-off gives us a chance to buy some of the best, fastest-growing companies at bargain prices. As they continue to grow sales and earnings and large institutions continue to buy the shares of these growth stocks, their prices will move higher, much higher than current market levels.

So thank you, Citigroup. Thanks Merrill Lynch. Thank You Sallie Mae. We hope you get well soon and will probably see you again someday in our portfolio when you start growing again, but for now thank you for the opportunity–you're problems are making us richer!

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