Louis Navellier discusses the latest trend in earnings, and which types of stocks and sectors he is favoring.
My guest today is Louis Navellier and we’re talking about growth and earnings and what we can expect for this year. Hi Louis, and thanks for joining me.
No, thank you.
Now, after the market burned and crashed a few years back, in 2009 when earnings started coming back, we saw some fabulous growth rates. But it’s kind of easy to do from a zero base, right? Since then, we’ve seen a little bit of a slowdown in growth...so what do you expect going forward?
Unfortunately, when earnings drop they’ve gone poof and disappeared. In the third quarter, earnings were down 0.9%. Fourth-quarter earnings are supposed to be up 3.1%, and first-quarter earnings are only supposed to be up 1.5%. The markets rally, of course, because of inflows, but the market is getting smart now; it’s all sorting this out.
Now, I don’t have an earnings problem but the market does. So like in Blue-Chip Growth I can get 12% sales growth, 22% earnings growth, so we expect it to go to quality big time. This earnings season is judgment day, and the market is getting very smart right now.
Are there particular sectors where you think the earnings are going to be better than others?
Sure. Financials are doing well, finally...you know they were horrible in 2011, they were bumpy in 2012. But when the feds said they were going to quantitative easing to infinity and Operation Twist to eternity, they kind of got going.
But we like title insurance companies more. They’re benefiting from all the real estate refinancing. It would be like Stewart Information (STC), Fidelity Financial (FNF), and another one, First American (FAF). We have mortgage rates like AG Mortgage Investment Trust (MITT); and we have one savings bank, Provident Financial (PROV) in California that might get bought out.
It seems like you’re skewing the earnings growth toward the housing recovery.
Certainly, and we have some homebuilders we like too. The inventory of new homes is pretty tight.
It certainly is.
Obviously, the housing market isn’t fixed yet, but at least for new homes the inventory is very tight.
Even in my little town in Tennessee, in my little community, we had 300 homes for sale in April, and now we have 240. So I mean, that’s not huge numbers, but its pretty much an indication, I think, of what’s going around the country.
And new home inventory is basically down to four months nationally...that’s very tight.
That is very tight. So homebuilders, mortgage REITs...
Savings banks. All are benefiting from the eternal Fed pump.
OK, and all of these companies you’re recommending on your stock rating system?
Yes.
Oh wonderful, so people can just go into your Web site?
Absolutely, absolutely. They can any stock and see what happens. They can save portfolios. We really would like people to do that. Put their portfolio in there and just check it every week or so.
And it costs nothing, right?
It’s free.
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