My MarketWatch Interview with Stock Market Veteran Louis Navellier
I interviewed stock-market veteran Louis Navellier, who remains bullish about the stock market. He also expects the Fed to cut interest rates four times this year.
LINK TO ORIGINAL ARTICLE: https://www.marketwatch.com/story/this-proven-growth-stock-pro-isnt-giving-up-on-nvidia-or-america-heres-why-605c70ab?mod=search_headline
Stock-market veteran Louis Navellier, the chairman and founder of investment firm Navellier & Associates, is well-known for spotting high-potential stocks through a combination of data-driven, quantitative analysis and hands-on fundamental company research.
Navellier, an occasional MarketWatch contributor, publishes several investment newsletters focused on growth stocks and is the author, most recently, “The Sacred Truths of Investing: Finding Growth Stocks that Will Make You Rich.”
Turbulent financial markets and the steep decline of the “Magnificent Seven” big-tech growth stocks and other former investor favorites make this a good time to catch up with Navellier for his perspective on what has happened to the stock market and what he sees coming.
In this recent interview, which has been edited for length and clarity, Navellier discussed stocks, bonds, the economy and tariffs. He also called out some of the stocks that have passed his firm’s strict test of relative strength. (Navellier commented before the market’s rally this week on better-than-expected tariff news.)
MarketWatch: The stock market now seems to be more reactive to politics than the business fundamentals you focus on. But it’s quarterly earnings season now. Against that backdrop, what’s your outlook for stocks?
Navellier: It’s imperative that earnings resume working. That’s why our firm focuses on earnings and not the ongoing tariff drama. I know we’re going to have double-digit earnings growth this year. There will also be falling rates. We have a pro-business president, but he’s an acquired taste. Not everyone is used to him and he did overreach, for lack of a better word.
MarketWatch: What is keeping you upbeat about stocks right now?
Navellier: Wall Street strategists are lowering their targets, but I ignore those people. I care about the analysts doing the actual earnings estimates for all my portfolio companies. At the end of each quarterly earnings season, I retest my quant systems. Here are a couple of observations: First, the companies we chose have to be in the top 45% of fundamentals. Then, when we do our quant-model overlay, we want the company to be in the top 5%.
MarketWatch: Let’s talk about those companies. What are some favorite stocks that have passed your test?
Navellier: Our largest holding is Nvidia Corp. Our second-largest holding is Eli Lilly & Co. We’re very bullish on Lilly, although they’ve struggled because there were rumors of U.S. tariffs on the pharmaceuticals. We also have a lot of Costco Wholesale Corp. shares. We view Costco as a luxury retailer. Go to their parking lot and see who is loading up. Another major holding of ours is Super Micro Computer Inc. We’ve been in it for years and rode it through all the ups and downs. They make the best server systems for Nvidia.
MarketWatch: To be bullish on U.S. growth stocks is to be bullish on America. But the recent decline in both the U.S. dollar and Treasurys suggests that many investors are looking elsewhere in the world. What would you tell them?
Navellier: I’m very bullish on America. We have a better model — no matter who we elect. We’re food and energy independent. The world economy is shrinking. Only America, Brazil and India are growing, and Brazil’s about to stop growing.
The dollar’s down this year, and people are net sellers of Treasurys. There is a lot of concern about America and its deficits and leadership. I’m not trying to pick on President [Donald] Trump, but he clearly doesn’t sell well everywhere. The bond market has temporarily calmed down, but the jury is still out. The bond-busters may sell further. When the dust settles, the dollar will come back. Hopefully, the dollar’s appreciation will offset those 10% tariffs.
MarketWatch: There’s been no “Fed put” to support the stock market so far. Are you expecting the Federal Reserve to cut interest rates this year?
Navellier: The Bank of England and the European Central Bank are both going to cut rates, and U.S. rates are going to come down once bond investors calm down. I’m still expecting up to four Fed rate cuts, and then we’ll get this turbo boost.
Overall, I expect a global interest-rate collapse — a real collapse. There’s deflation in China — they just dumped a whole bunch of goods on us. Meanwhile, oil prices are at a four-year low.
MarketWatch: The Trump administration’s on-again, off-again trade tariffs have whipsawed investors. Where do you see U.S. trade policy ultimately taking the economy?
Navellier: The U.S. has a big underground economy, so you either have to do a VAT (value-added tax) or a tariff. The U.S. government is going to raise money to pay down the federal budget deficit. I think we will have freer trade when it’s all said and done.
MarketWatch: Do you see a recession in the U.S. before that happens?
Navellier: No. The U.S. economy may have a negative first quarter because of the trade imbalances, but I think we get our mojo back in this current second quarter. There is no doubt that business planning was hurt by the uncertainty surrounding what Trump is doing. Hopefully, all will be forgiven and we’ll get back to normal. Even if you’re a Trump supporter, you were probably slightly annoyed for a while.
MarketWatch: Any advice for how investors can get a better read on the markets, with so much uncertainty around?
Navellier: The best tip sheet is Truth Social — Trump’s social media platform.
MarketWatch: Anything else, or is that enough to go on?
Navellier: I would recommend that people own monopolistic stocks that dominate their business. I like margin expansion (i.e., an increase in a company’s profit margins). I like it when a company’s earnings grow faster than sales. I also like earnings surprises and guidance. Don’t get distracted by all of the noise. Markets are liquid, especially when earnings come out. The other times it’s a bunch of games and shenanigans. The main message is to buy and hold, and also to buy monopolies. My 1,000% winners were all monopolies.