Louis Navellier of Navellier & Associates has been investing in growth stocks for over 30 years. The large fund recently filed its 13F for the second quarter of 2012 with the SEC, revealing many of the positions in its portfolio. Navellier & Associates doesn’t recommend or endorse any of the stocks or analysis in this article, and we have no relationship with the fund, but based on SEC filings these are our opinions of what they are thinking. Read on to see the fund’s largest positions as of the end of June or compare them to previous portfolio reports.
Navellier’s top holding was the most popular stock among hedge funds in the first quarter of 2012: Apple Inc. (NASDAQ:AAPL). The fund had owned about 125,000 shares at the end of March and during the second quarter trimmed the position very slightly to about 123,000. We don’t see this change as significant, especially given the profits that Navellier has likely earned on this position and the desire to cash in to some degree. Apple Inc. continues to deliver good growth numbers and analysts forecast continued growth that implies a forward P/E ratio of 12. Even a value fund, let alone a growth fund, should find that interesting.
Alliance Data Systems Corporation (NYSE:ADS) took the #2 spot in the portfolio, with Navellier owning about 530,000 shares at the end of June. Again, this was more or less unchanged from the end of the first quarter. Alliance Data Systems Corporation (NYSE:ADS) provides customer rewards management services and has built that business into a $6.5 billion market cap. In its most recent quarter it grew its earnings by 50% compared to the same period in the previous year, so its trailing P/E of 21 doesn’t look that high. It has a five-year PEG ratio of 1 going by analyst expectations of growth rates.
The third largest position in Navellier’s portfolio is Monster Beverage Corp (NASDAQ:MNST). Monster Beverage is up over 70% in the last year as it continues to deliver strong growth (38% earnings growth in its most recent quarter compared to the same quarter last year) in the form of energy drinks and other beverages. The market expects strong growth to continue judging by its trailing P/E of 39. Navellier initiated a position of about 950,000 shares in the first quarter of 2012 and cut this stake slightly to about 940,000 shares by the end of June. Billionaire Jim Simons’ hedge fund has a large stake in Monster Beverage Corp (NASDAQ:MNST).
The fund owned about 700,000 shares of Whole Foods Market Inc (NASDAQ:WFM) according to its 13F, again essentially unchanged from the end of the first quarter. Ken Griffin’s Citadel Investment Group also owned shares of Whole Foods at the end of the first quarter of the year. Whole FoodsMarket Inc (NASDAQ:WFM) is up 33% this year after beating earnings estimates- albeit not by much- for four quarters in a row and showing double-digit percentage increases in revenue and earnings compared to last year. Its trailing P/E is 40.
Finally, Navellier slightly cut its position in International Business Machines Corp. (NYSE:IBM) to about 330,000 shares. IBM is a bit unusual for the top stocks in this portfolio, as it is “only” up 4% so far this year. IBM trades fairly cheaply relative to the previous two stocks on this list at a trailing P/E of 14, and saw low earnings growth in its most recent quarter compared to the same period in the previous year. On a forward basis, International Business Machines Corp. (NYSE:IBM) is even cheaper at a multiple of 12. Warren Buffett’s Berkshire Hathaway also owns shares in IBM (see Warren Buffett’s top picks).
Navellier’s top five stocks haven’t shown much change in share count since three months ago. Much of the growth in these positions has come from gains so far this year- Apple, Monster, and Whole Foods are all doing very well in 2012. Perhaps Navellier is just letting the winners of the portfolio run, knowing that it has plenty of room to sell out at a profit if their fortunes decline and that many of these stocks could still have plenty of upside to come.