Ask any investment advisor, and they’ll tell you that long-term gains trump short-term winnings every day of the week.
Big name hedge fund managers like Buffett and Icahn have gained popularity due to their long tenures in the game and envious rates of return.
His performance has earned him a treasure trove of accolades and support. Even Steve Forbes has recognized the manager’s career, saying Navellier “has had a most enviable long-term investment record.”
The de facto growth guru publishes his long stock picks every quarter in a 13F filing as required by the SEC. This quarter, he’s submitted those picks a month in advance, giving us a fresh look as to what his portfolio looks like without the typical 45-day delay.
Navellier sunk a quarter of a billion dollars into four new stocks in Q3 of this year. However, the four fit within the narrative of a market finally flipping over (which I covered in detail recently), while still keeping some growth stock traits. Tailoring his portfolio to the changing winds of the market is a great example of Navellier’s insight, and it might be wise to follow suit.
Dr. Pepper Snapple Group, Inc. (NYSE: DPS)
The fund’s investment in DPS has a Buffett-esque feel to it, proving that consumer staples are attractive when the horizon might be gloomy. Navellier and his staff invested nearly $65 million into the company, making it their largest new purchase last quarter.
What might draw a famous growth manager into a stock like Dr. Pepper Snapple Group? New all-time highs, strong earnings and a rosy outlook compared to direct competitors come to the top of my mind. DPS issued an earnings beat in late October and pushed earnings per share revisions upward as a result.
On the flipside, Coca-Cola saw the same quarter give way to weaker sales volume, causing management to warn of weaker earnings growth rates for 2014 and 2015.
WellPoint, Inc. (NYSE: WLP)
Healthcare stocks are another hallmark investment of an early bear market, and Navellier took a $63 million stance on that prediction. People don’t stop getting sick regardless of market cycles, and investors are flowing money into many healthcare companies as proof of their resiliency.
WellPoint, which will soon change its name to Anthem, has appeased earnings-minded growth investors with positive update after positive update in terms of forecasts. The Affordable Care Act and its increased number of insured American’s certainly take some responsibility for those advances. Barring the unlikely event Obamacare is repealed (i.e. by our next president), WLP stock will likely continue to benefit.
CVS Health Corp. (NYSE: CVS)
Think of CVS as loose hybrid of both DPS and WLP, landing somewhere in between the consumer staples and healthcare sectors. The drugstore’s latest rebranding to CVS Health has many analyst’s taking note, and Navellier has followed through by devoting $61 million to the stock.
A cornerstone of growth investing is increasing demand. CVS Health is delivering on that front in terms of specialty drugs, which have seen heavy consumer support this year. Inflation of drug prices and wider product offerings should propel this segment going forward, which could translate to a higher share price for CVS.
American Electric Power Co., Inc. (NYSE: AEP)
Utilities providers make for great investments coming out of a bull market. As investors are forced to look elsewhere for returns, many asset managers encourage moving into stocks with consistently growing dividends. The nature of a utility company’s cash flows makes them great income payers, and AEP doesn’t disappoint with its impressive 3.7% yield.
Colder weather going into the end of this year should help keep AEP’s share price growing in the near term -- it’s already pushing up against all-time highs. That could lead to a nice profit on Navellier’s $61 million investment.
Risks To Consider: Navellier’s latest moves are defensive in nature, so those looking for more traditional growth picks should look elsewhere in his portfolio. Be wary, though. Growth stocks can have some unfavorable metrics on paper. The expectation of rapidly growing earnings can mean high P/E ratios, entering after big percentage gains, etc. The current market landscape may not be ripe for those types of picks.
Action To Take --> Navellier’s latest investments are textbook for treading uncertain waters ahead. Consider DPS and its competitive edge to both hedge your portfolio and add growth at the same time. AEP’s consistent earnings growth and reliable dividend make it a stand out for me as well.
Another great way to hedge against downturns is to look for stocks with the highest Total Yield. These shareholder-friendly companies are so resilient that they outperformed the broader market during the dot-com bubble and the 2008 financial crisis. To learn more about Total Yield investing, click here.