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Is Louis Navellier’s Growth Investor really good?
How have Louis Navellier’s stock recommendations performed in the past?
Can you really achieve better-than-average investment returns by following his stock picks?
Are there any other better alternatives to Louis Navellier’s Growth Investor?
After trying out Louis Navellier’s Growth Investor newsletter, here’s my experience.
Louis Navellier’s Growth Investor Investment Strategy
So, who is Louis Navellier?
What is his investment strategy?
Louis Navellier is the editor of the Growth Investor Newsletter which is the cheapest-priced newsletter under him.
There are quite a few very expensive newsletters that he is also selling:
- Breakthrough Stocks: $1,999
- Accelerated Profits: $1,999
- Platinum Growth: $9,995
He also founded a company called “Navellier & Associates” to help manage investors’ money.
His investment strategy is mainly focused on growth stocks.
Here’s a list of fundamental factors that Louis Navellier uses to screen and evaluate stocks:
- Upward Earnings Revision
- Earnings Surprise
- Growth in sales
- Operating Margins
- Free Cash Flow
- Earnings Growth
- Earnings Momentum
- Return on Equity
During an online background search on him, I found out about this SEC lawsuit against him and his company.
The Securities Exchange Commission charged them in August 2017, alleging that they breached their fiduciary duties and defrauded their clients through the use of marketing materials that included false and misleading statements regarding the past performance of the firm’s Vireo AlphaSector investment strategies.
Apparently, the marketing-beating past performance of the AlphaSector investment strategies was fabricated.
Despite knowing this, they continued to sell their clients this investment strategy.
In the end, the judge ruled that they had to pay more than $30 million in monetary relief.
Louis Navellier’s Growth Investor Stock Picks & Performance
There are two portfolios where you can find Louis Navellier’s stock recommendations.
One is the high-growth investment portfolio and the other one is the elite dividend-payer portfolio.
Let’s first look at the stock picks inside the high-growth investment portfolio.
This high-growth investment portfolio is 60% conservative stocks, 30% moderately aggressive stocks, and 10% aggressive stocks.
For the aggressive stocks, there are currently four stock picks with an average return of -34.69% as of 25th Oct 2022.
All four stock picks are down at least 20%.
The stock pick with the maximum loss is Volkswagen AG which is down almost 50% since it was recommended in Aug 2021.
For the moderately aggressive stocks, there are currently 12 stock picks with an average return of 7.45% as of 25th Oct 2022.
This average return is being distorted by one of the stocks, Nvidia which was recommended in May 2019 and has been up by about 190%.
If we take away this stock, the average return of the remaining 11 stock picks would be about -9% as of 25th Oct 2022.
Out of these 12 stock picks, 7 of them are down with a maximum loss of -65.63% and minimum loss of -12.77%, and 5 of them are up.
For the conservative stocks, there are currently 26 stock picks with an average return of 4.05% as of 25th Oct 2022.
Out of 26 stocks, 16 of them are down with a maximum loss of -31.23% and minimum loss of -1.6%, and 10 of them are up.
Only two of the 10 stocks are up substantially (one is up 150% while the other one is up 86%), and both were recommended in 2019.
Most of Louis Navellier’s 2021 and 2022 stock picks are not doing well.
Recently, Louise Navellier recommended his subscribers cut loss on one of the 12 moderately aggressive stocks.
This stock Endava plc was recommended on 29th Oct 2021 with a buy price of around $158.
As you can see, Louis Navellier recommended this stock right at its historical peak.
About one year later, he issued a Sell alert on Endava to exit at an almost 50% loss.
Personally, I am amazed by his perfect timing to recommend buying the stock almost at its peak, and I am also quite put off by this short holding period.
First of all, this is investing, not trading.
If it took Louis Navellier less than one year to change his mind about a stock recommendation, then most likely he didn’t really research the stock properly or he is NOT looking for high-growth stocks with long-term potential.
Below is his reason for cutting the loss after the stock tanked 50%.
It seems like his reason for selling is the most recent quarter’s earnings grew quite fast but fell short of analysts’ expectations and the next quarter’s earnings growth is forecast to be slowing.
To me, this seems too short-term focused and purely based on other people’s (i.e. analysts’) forecasts.
I don’t see any meaningful insight or analysis from Louis Navellier himself.
Have the company’s fundamentals as well as its potential long-term growth drastically changed in less than a year in his opinion?
It’s NOT even discussed in his brief explanation.
To issue a “Sell” just because the year-on-year quarter earning growth is forecast to slow for the next quarter, I think it just does not make sense.
Below is the chart of Apple’s year-on-year quarterly growth as well as quarterly revenue.
As you can see, its YOY quarterly revenue growth is not forever increasing.
For some consecutive quarters, it’s even declined.
But, fundamentally, Apple is a very solid company with a wide moat and long-term growth potential.
If you had sold your APPLE stock just because quarterly growth has declined in the short term, then you would have missed out on the massive rise in its share price in the next few years.
Another stock pick that has suffered a 65% loss is ZIM Integrated Shipping as of 25th Oct 2022.
Louis Navellier recommended it on 25th Feb 2022 with a buy price of $70.
In less than 8 months, the stock has fallen by almost 72% from $85 to $24.
Below is the explanation given by Louis Navellier for recommending ZIM Integrated Shipping.
Again, I was expecting a better, in-depth, and insightful explanation, but it was just analysts’ revenue and earnings estimates regurgitated again.
I would very much like to see an analysis of the shipping industry, and its industry outlook as well as the competitors.
Also, what about the company’s competitive edge?
Why do you choose ZIM Integrated Shipping over its competitors?
But, there is none of such analysis.
Overall, I am not impressed at all by the stock picks as well as the monthly issues.
There are other stock analysis and research platforms that offer you much better stock ratings as well as in-depth analysis.
I personally use Seeking Alpha as one of my stock research platforms.
Seeking Alpha quant ratings and stock grades are much more robust and powerful than the simplified stock grade offered by Louis Navellier.
Louis Navellier’s Growth Investor Pricing
So, how much does Louis Navellier’s Growth Investor subscription cost?
And what do you actually get?
As a subscriber, here’s what you get the following:
- 12 monthly issues of Growth Investor with one monthly stock pick
- Growth Investor Model Portfolio
- Various Special Reports (e.g. The #1 Stock for the Driverless Car Revolution, The AI Revolution)
- 90-Day 100% Satisfaction Guarantee
There are three types of subscription plans:
- Basic Membership: $49/year
- Pro Membership: $79/year
- VIP Membership: $99/year
The difference lies in how many more special reports you want to get.
The more expensive the membership is, the more special reports you get.
These special reports mostly tease you with the next moonshot stocks or the hidden small-cap stocks that could soar in the future.
The thing about moonshot stocks is that there is a very high probability of you losing most if not all of your investments and an extremely low probability of actually making the “so-called” extraordinary returns.
In fact, the legendary fund manager Peter Lynch talked about moonshot stocks in this video.
He tried investing in these “moonshot stocks” and never made any money, and advised people not to invest in them because all these companies are unprofitable and had nothing but a very good story to sell to investors.
Generally, I don’t recommend people buy moonshot stocks.
If you really want to invest, then I think you should only invest a small amount of money that you can afford to lose.
I allocate a very small portion of my portfolio to invest in high-growth stocks that I have researched and analyzed myself and have a strong conviction about.
To find high-growth stock ideas, I have been using “Motley Fool Rule Breakers” and Seeking Alpha.
Motley Fool Rule Breakers: A Better Alternative
The Motley Fool Rule Breakers investment strategy is focused on uncovering the hidden gems in the stock market.
So, it’s not the mainstream stocks (i.e. IBM and Apple) that everyone is following, but little-known stocks that have great potential to be the market leader in the future.
Think “Amazon” and “Netflix” which were recommended by Motley Fool Rule Breakers many years ago.
So, what do they look for in a high-growth stock?
Here are the five things that they look for in a good growth stock:
- Innovative Company (i.e. it must be an innovative company that is making waves in emerging industries)
- Competitive Advantage (i.e. it must have competitive advantages over its competitors. For example, patents, proprietary technology and etc)
- Sustainable Business (i.e. it must be a business with good long-term prospects and are unlikely to get disrupted by new technology)
- Good Management (i.e. it must have a good management team and strong leadership)
- Strong Consumer Appeal (i.e. it must have strong branding and strong customer interest)
Generally, these growth stocks will be stocks that fall into the following categories:
- Stocks in emerging countries (e.g. China, India, South Africa, South Korea, Mexico, Thailand, Indonesia, etc)
- IPO stocks (i.e. newly listed stocks on the stock exchange )
- Stocks in fast-growing and emerging industries (i.e. Cyber Security, Big Data, Cloud Computing, 3D Printing, etc)
- Stocks of future technology companies (e.g. Internet of things, 5G, Artificial Intelligence, Blockchain, etc)
So, how have Motley Fool Rule Breakers stock picks performed over the years?
Can it really help you beat the market?
Below is the performance comparison between Rule Breakers and the S&P 500 as of Oct 2022.
As you can see, Motley Fool Rule Breakers beat the market by almost 2 times.
Now, what about the performance of each individual stock pick?
So, let’s take a look at the performance of individual Rule Breakers stock picks.
As of 12th Oct 2022, there are 130 stock recommendations with more than 100% returns.
Here are some examples of Rule Breakers stock recommendations:
- MercadoLibre: 5,589%*
- Tesla: 14,656 %*
- Shopify: 39,116%*
- The Trade Desk: 16,918%*
- Intuitive Surgical: 5,232%*
- Meta (Previously Facebook): 1,143%*
- Etsy: 979%*
- Hubspot: 514%*
- Monster Beverage: 1,441%*
- Universal Display: 1,464 %*
[*Returns as of 27th Jan 2022 since it was first recommended. Past performance is no guarantee of future results. Individual investment results may vary. All investing involves risk of loss.]
The reason why I subscribe to the Motley Fool Rule breakers is to get a lot of well-researched high-growth stock ideas.
But, personally, I don’t buy every single stock pick.
What I do is I will go through their stock recommendations and then do my own independent research and analysis before making my decisions because not every stock pick suits my investment portfolio.
Will the Motley Fool Rule Breakers always be right about their stock recommendations?
No, because no one can be right about their stock picks 100% of the time.
Let me sidetrack a bit here.
If any stock picking service tells you that they have a close to 100% success rate on their stock picks and can guarantee you high investment returns, you should definitely stay away.
What I like about the Motley Fool Rule Breakers is that they are very open and transparent about their bad stock picks.
As a member, I can see the performance of ALL its past and current stock recommendations (even for closed positions).
For some other stock-picking services that I’ve tried, they don’t publish the performance of all their past and current stock recommendations, so it’s not easy for you to find out their true track record.
For example, the year 2022 has not been good for high-growth stocks because of rising interest rates and high inflation.
So, you can see a lot of Motley Fool Rule Breakers’ stock recommendations are not doing very well.
The truth is that other stock-picking services are not doing well either because of the stock market crash.
Do I still think it’s worth subscribing to the Motley Fool Rule Breakers?
My answer is yes.
The stock market goes up and down all the time.
Every few years, there is a bear market.
In fact, I think the bear market is the BEST time to start investing in the stock market.
During a bear market, it’s more likely to find great businesses selling at very cheap prices because people are just selling out of fear when the business is still fundamentally sound.
A market crash is a time when huge wealth transfers from irrational and emotional investors to patient and rational investors.
So, how much does a Motley Fool Rule Breakers subscription cost?
The annual subscription used to cost $199 per year.
But, right now, it is just $99 a year to join Motley Fool Rule Breakers as a new member, which is just $1.9 a week.
Is Motley Fool Rule Breakers worth it?
For $1.9 a week, personally I think it’s a steal.
What’s more, there is a 30-day money-back guarantee.
What that means is that If you decide Motley Fool Rule Breakers isn’t for you, simply cancel your 1-year subscription within the first 30 days, and you’ll be refunded 100% of your membership fee immediately.
Check out the latest promotion for NEW Motley Fool Rule Breakers members here
Thank You, Gladice . I enjoy reading finance articles. Any suggestions on advisers online that specialize in mutual funds.
Lots of interesting inside information into this “Industry “ . Will follow your articles if there are more to come. Thank you from Germany