A Stock-Pickers Paradise

Last week Goldman Sachs (GS) reported that its earnings jumped 79% last quarter. Whereas Bear Stearns (BSC) reported that its earnings plunged 61% in the same quarter.

Think about that. Two companies that are in the same industry working in the same environment and facing the same obstacles but had earnings that came to radically different results.

How could this have happened?

The answer is very complicated, but I’ll give you the short version. Goldman made some very smart moves and Bear made some very dumb moves. Sometimes business is as simple as that.

This is an important lesson for all investors. Being in the right sector isn’t enough. You need to own fundamentally superior stocks as well.

In my Blue Chip Growth Letter, that’s exactly what I show investors how to do. I’ve been able to beat the market for over 20 years by focusing on leading companies in all kinds of sectors.

I don’t care if it’s health care or tech or even selling animal feed in Saskatoon, I’ll go anywhere to find a great stock. Actually, one of my favorite stocks does sell animal feed in Saskatoon! Subscribers to my Blue Chip Growth service are sitting on a nice gain in Canada’s Potash Corp. (POT). Sure, the company doesn’t carry with it a lot of glitz and glam, but as long as it’s fundamentally superior, I like it. Potash is a great stock with enormous growth potential. It also doesn’t hurt that the Canadian dollar is at a 30-year high against the U.S. dollar.

My advice to you is, don’t be fooled by sector investing. Lots of times a company can look great on the outside, but that’s simply because it’s in a hot sector. Wall Street tends to behave like a manic crowd. If something is hot, they’ll keep buying. That is, until earnings come out and investors learn what it is they’ve been buying.

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Since March 2004, shares of Sprint Nextel (S) have been basically flat. Yet, I looked at the same sector and found a great stock. The hitch is that I found it outside the United States. In March 2004, I recommended America Movil (AMX) to my Blue Chip Growth subscribers, and the stock has been up over 430% since then.

Every sector has a diamond and a lump of coal. Learn to tell the difference!

Most new investors are surprised to learn that strong companies in lousy sectors can be great investments. It’s true, and I’ll give you a perfect example. In 2002, Money Magazine celebrated its 30th anniversary, so the company wanted to find out what was the best-performing stock during the last three decades.

You would think the winner was some high-tech outfit, right? Some Silicon Valley hi-flier that invented the 12th dimension maybe. Nope. The top-performer was Southwest Airlines (LUV). The best stock not only came from a boring sector, it came from the worst sector imaginable! Nearly every day a new airline is either entering, or promising to leave, bankruptcy. Yet Southwest was able to follow its simple business plan of offering no frills service and the public responded.

Keeping one’s eyes open for fundamentally superior stocks is a lesson for every investor, and it’s especially important in this market. The current market is ideal for my style of investing because I’m a stock-picker. Last Tuesday, the Federal Reserve gave us stock-pickers a green light by slashing interest rates by 0.5%. The market responded by soaring 412 points in two days. I expect more rate cuts before the end of the year, so more good news is sure to come our way. I love this market, and I’m so excited by the great stocks I see.

Another stock with huge potential from my href="/order/?pc=8SU241"target="_blank">Blue Chip Growth Buy List is CSX Corp. (CSX), the railroad. Thanks to the! weak do llar, the export sector of the economy is booming, and that means all those commodities need to be moved around—and that’s where CSX comes in. In July, CSX stunned Wall Street by reporting earnings that were seven cents a share above consensus estimate. Best of all, the shares are still going for just 13 times next year’s earnings. I can’t wait for the company’s next earnings report on October 16.

Next week will be the final week of the third quarter. I can’t believe 2007 is nearing the back stretch! Soon, the third-quarter earnings reports will start to come out, and I expect to see a lot more surprises on Wall Street.

Hold on tight because this is an exciting time to be a stock-picker!

Navellier’s Blue Chip Growth Letter recommendations have returned more than 188% from 1998 through 2006, according to The Hulbert Financial Digest, an independent tracker of investment newsletters. Get in on the profits now. Click here now try Blue Chip Growth today, risk-free.

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