The U.S. dollar’s recent pullback has given some big-name stocks some breathing room, and as a result, the seismic shift has been interrupted by investors rotating into large-cap stocks like Amazon.com, Inc. (NASDAQ:AMZN), Caterpillar Inc. (NYSE:CAT) and General Electric Company (NYSE:GE).
However, I refuse to throw good money after bad; the strong U.S. dollar will continue to punish these stocks’ quarterly results, and as such, these large-cap stocks still have weak forecasted sales and/or earnings.
So, instead, let’s stay focused on small- and mid-cap companies that have robust forecasted earnings and sales. As always, I recommend that you hold 60% of your portfolio in conservative stocks, 30% in moderately aggressive stocks and 10% in aggressive stocks.
Let’s take a look at one stock I’m eyeing in particular:
NV5 Holdings Inc (NVEE)
For more than 60 years, NV5 Holdings Inc (NASDAQ:NVEE) has provided professional and technical consulting services, as well as certification services to a variety of clients in the public and private sectors, including federal, state, municipal and local governments and education, healthcare and energy agencies.
As its name might suggest, NV5 specializes in five distinct areas:
- Construction Quality Assurance: Prior to the start of construction, NV5 evaluates its clients’ construction plans and designs to determine compliance as well as provide ongoing quality control during the project.
- Infrastructure: NVEE helps its clients plan, design and manage infrastructure projects, providing solutions for any challenges that arise.
- Energy: Providing engineering and consulting services, NV5 Holdings helps clients with their energy generation, distribution, transmission and construction needs.
- Program Management: NV5 helps manage projects for its clients, whether it’s facilitating contract negotiations, developing and reviewing budgets and schedules, or setting up meetings and conference calls.
- Environmental: NV5 specializes in three environmental practices: 1) Hydrogeology 2) Occupational Health and Safety 3) and Land Use Permitting and Environmental Compliance. NVEE helps its clients investigate and analyze environmental conditions.
Recently, NV5 Holdings announced that it acquired Richard J. Mendoza, Inc., a program management firm that specializes in providing construction program consulting services to clients in the transportation and clean water/wastewater industries. Mendoza is based in San Francisco and has a staff of 95 professionals, with annualized revenues of approximately $15 million. This acquisition will immediately add to NV5 Holdings quarterly results.
We bought NV5 on May 8, just ahead of its earnings report, and that proved to be excellent timing. Net revenues were up 52% to $22.8 million for the quarter. Net income was $1.1 million or 18 cents per share compared with 13 cents per share a year ago.
Despite the strong report, earnings missed expectations by 2 cents per share. Investors saw past the miss, and NVEE stock rose 15% that week, which was an excellent sign. Buyers should come pouring in when a company reports this kind of growth in this market.
So, I’d like us to pick up shares of NV5 Holdings. Please note that NVEE is a thinly traded stock and should only be bought via a limit order within 25 cents of the previous day’s close. NV5 is a moderately aggressive “buy.”
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
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