Big news today! I'm very happy to announce the release of my new book, The Little Book That Makes You Rich: A Proven Market-Beating Formula for Growth Investing. This is the latest in John Wiley & Sons' "Little Book, Big Profits" series.
Now, for the first time, I've described in complete detail my strategy that's been able to beat the market year after year for over 20 years. Don't worry, I've made the book as fun and easy-to-use as possible. I promise there are no equations or weird Wall Street jargon. Just a powerful, proven formula to help you find today's market-beating growth stocks.
The reviews are in, and we're a hit!
The New York Times writes:
In short, he has done the seemingly oxymoronic, and done it well: He has written a book on growth investing that ends up being conservative in its approach.
The Financial Times calls The Little Book That Makes You Rich:
...as clear an intellectual justification for growth investing as you will find. The formula at its heart makes eminent sense.
BusinessWeek published an extended excerpt from the book.
From the title of this book, The Little Book That Makes You Rich, you may have guessed the book is literally a compact size and just 185 pages. But make no mistake, it's packed with information that all investors will find valuable.
The heart of the Navellier system is to ignore your emotions. I know that's sometimes hard to do, but it's crucial in becoming a successful investor. When you're investing, you aren't investing in feelings or hunches. Instead, stocks represent real businesses. That's why I focus on the fundamentals of being a strong business.
Over 20 years of investing, I've refined my system to include eight key fundamental variables. For me to find a stock I like, it has to rate near the top in all of these variables.
The eight variables are:
1. Positive Earnings Revisions. This is a particularly important variable this time of year. I like to see stocks that have had their earnings estimates increased by Wall Street analysts. This usually tips us off to a stock that's about to "beat earnings."
2. Positive Earnings Surprises. Speaking of beating earnings, I also look to see if a stock has been able to beat its earnings estimates and by how much. This is an important number to watch because it often tells me about a stock that Wall Street doesn't "get."
3. Increasing Sales. I also like to see a company that can grow its sales over time. Why? Because it's one number that's hard to fake. My background is in accounting, and I've always made sure to steer away from companies that use questionable accounting practices. Sales growth is a solid indicator.
4. Expanding Operating Margins. This simply tells me if earnings are growing faster than sales. A company that's able to expand its operating margins is usually a company that has a dominant position in its industry. This company can raise prices without seeing a drop-off in sales. That's a nice place to be.
5. Free Cash Flow. This tells me how much money a company has left over after paying for the costs of its business. Having a strong cash flow is important because it allows a company to invest more resources in growing its business.
6. Earnings Growth. This is the heart of all good financial analysis and I rely on it as well. As long as any company is able to grow its earnings consistently, its stock will do well.
7. Positive Earnings Momentum. It's not enough for me to see earnings growth, but I also want to see the rate of growth increase as well. These "momentum" stocks are hard to spot. That's why my team of analysts and I scan over 5,000 stocks every week.
8. Return on Equity. This is the gold standard. ROE tells me how efficiently a company is managing its resources. I can't interview every senior manager, so I like to think of ROE as a report card for management.
If a stock rates near the top on all eight variables, then congratulations! It has passed the first test in the Navellier system.
You heard right. That's only the first hurdle.
Now I know the stock has superior fundamentals. But there's more--and this is where the Navellier system sets itself apart from other stock-rating systems.
A stock not only must be fundamentally superior, but it also needs to be quantitatively strong, as well. By quantitatively strong, I mean that the stock needs to be low risk relative to its potential. You'll find that controlling for risk is one of my most important goals in my system. I explain this in more detail in Chapter 11 of the book.
Once I've selected a stock that's fundamentally superior and quantitatively strong, then it's finally ready for one of my model portfolios. Assembling a portfolio, however, is a critical task that most investors never think about. This is another aspect that separates my system from others. I don't just pick a bunch of stocks and toss them together. Instead, I place great emphasis on the contents of each portfolio.
This means I like to pair stocks that zig with other stocks that zag. The goal is to create an overall portfolio that's stable. The Navellier system is not only designed to make you eat well, but we want you to sleep well too!
That's the Navellier system in a nutshell. The book goes into much greater depth, and I show you dozens of examples of how we've been able to spot outstanding stocks before the Wall Street crowd.
Plus once you read this Little Book cover-to-cover, you'll discover that I've done the unprecedented. I'm giving readers of this Little Book free access to my stock-rating system, PortfolioGrader Pro. I update my ratings every single week, so you'll always know my current opinion on nearly any given stock.
I'm already receiving emails from folks who have read the book. Their kind words and reviews of how the message in this Little Book has opened their eyes to the power of growth investing are gratifying beyond words.
I hope you'll buy the book and begin your own journey to becoming a market-beating growth investor!
