Louis Navaliers thesis on growth stocks based on his book seems well thought out. Anyone know of any flaws?
I'm specifically wondering if anyone knows any problems or complications that may arise from Louis Navaliers methodology of picking growth stocks. Specifically the ones discussed in his book, "the little book that makes you rich". He looks at these criteria to decide:
positive earnings revisions.
positive earnings surprises.
increasing sales growth.
expanding operating margins.
strong cash flow.
earnings growth.
positive earnings momentum.
high return on equity
It does seem to make sense. He uses standard deviation as a warning of when to get in and out as well. Anyone see any flaws with this methodology?
Answers
699 points
7million7years answered one year ago …
Doesn't mean the stock is cheap! But, that's only important to us bargain-hunters ...
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164 points
Prudent answered one year ago …
By the time you get all these in a stock it will be pretty high priced stock but you can buy
it if you can grab it , when the stock comes down a little due to bearish sentiment.
Growth stocks are also picked based on trend analysis besides the factors mentioned above..
3970 points
EthanR answered one year ago …
Louis sends me mail all the time telling me about this and that stock that he picked that is up big. I keep writing back, asking him to tell me if there are any stocks that he picked that have done poorly, or at least to publish a complete detailed list of his track record (the way certain TTR analysts do), but so far Louis hasn't written back to me.
Some of what you have described above sounds similar to William O'Neil's CANSLIM method.
312 points
mjrenn answered one year ago …
I get mail from Loius as well. I subscribed for 3 months. His recommended portofolio shows some good gains but the Emerging Growth December 07 issue had 72 buys. If you only purchased 1 or 2 shares from his list and they were the wrong ones you would not be happy.
Louis or his readers could better if they read your Tycoon Report today Ethan.
411 points
jester112358 answered one year ago …
I subscribed to one of his newsletters and as with most newslettter you have to apply your own due diligence. His overall performance in a fully diversified portfolio was about 25% for FY 2007 according to Hubert financial digest. He does tend to select stocks with have lots of momentum but that just means lots of institutional investors are moving money into the stock and this is always a good thing. So, far this year I've been following all his picks, assuming you invest $2K in each of his pick as of today you would be up $2600 on a total capital of $50000 or 5.2% for about 6 months. This is better than the S&P, but not spectacular.
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