We recently compiled a list of the 10 Best Stocks to Buy According to Navellier & Associates. In this article, we are going to take a look at where Super Micro Computer, Inc. (NASDAQ:SMCI) stands against the other stocks approved by Navellier & Associates.
Founded in 1987 by growth analyst Louis Navellier, Navellier & Associates is an independent firm based in Reno, Nevada. Navellier & Associates specializes in identifying market inefficiencies to find top-growth stocks through a disciplined quantitative and fundamental analysis system. With over 30 years of experience, they offer customized portfolio strategies for individual investors to maximize returns while managing risk. Unlike competitors who mimic indexes, Navellier aims to outperform them, resulting in low correlation with benchmarks and increased diversification.
Louis Navellier is the Founder, Chairman of the Board, Chief Investment Officer, and Chief Compliance Officer of Navellier & Associates, Inc. With decades of experience applying academic techniques to real market scenarios, he advocates for disciplined quantitative analysis to identify stocks that can outperform the market. His approach involves a rigorous three-step process: quantitative analysis, fundamental analysis, and optimization of selected securities for portfolio inclusion. This approach has been used by the firm where they employ a highly disciplined, bottom-up stock-selection process for most portfolios. First, they screen market and stock statistics to measure reward (alpha) and risk (standard deviation), selecting stocks in the top percentiles. Next, they further screen the top-ranked stocks for high-profit margins, strong earnings growth, and reasonable price/earnings ratios based on future earnings. Finally, a proprietary optimization model maximizes portfolio alpha while minimizing standard deviation, creating well-diversified portfolios across various sectors and industries.
Since 1980, he has shared his insights through the MPT Review, a stock advisory newsletter. Since 1987, he has actively managed individual portfolios, mutual funds, and institutional portfolios. Known for his charismatic leadership, Louis Navellier has been featured extensively in international media, including CNBC, Bloomberg, The Nightly Business Report, and Wall Street Week. His insights have also been highlighted in Barron’s, Forbes, Fortune, Investor’s Business Daily, Money, Smart Money, and The Wall Street Journal. He has been profiled in books such as Kenneth A. Stern’s “Secrets of the Investment All-Stars” and Alan R. Ackerman’s “Investing Under Fire.” Mr. Navellier earned his B.S. in business administration in 1978 and his M.B.A. in finance in 1979 from California State University – Hayward.
Navellier & Associates is a well-known advisory firm with 1,314 clients and manages assets worth $743,578,818, as reported in their Form ADV from March 2024. Their Q1 2024 filing shows they handle $811,568,534 in securities, with the top 10 holdings making up 29.01% of the total.
Our Methodology
This article covers Navellier & Associates’ top 10 stock picks for the first quarter of 2024. We’ve included analyst ratings and key details about these companies, along with the number of hedge funds investing in each. Why focus on hedge fund investments? Our research indicates that copying the top picks of leading hedge funds can result in better-than-market returns. Our quarterly newsletter’s strategy, which chooses 14 small-cap and large-cap stocks each quarter, has achieved a 275% return since May 2014, outperforming the benchmark by 150 percentage points. (see more details here).
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Super Micro Computer, Inc. (NASDAQ:SMCI)
Navellier & Associates’ Stake Value: $42,017,248
Number of Hedge Fund Holders: 35
Securing the 2nd spot in Navellier & Associates’ top 10 stock picks is Super Micro Computer, Inc. (NASDAQ:SMCI). Super Micro Computer, Inc. (NASDAQ:SMCI) specializes in high-performance computing solutions, which are increasingly in demand due to the growth of data centers, cloud computing, and AI. Super Micro Computer, Inc. (NASDAQ:SMCI) is recognized for its innovative products, including servers and storage systems. Recently, Super Micro Computer, Inc. (NASDAQ:SMCI) reported a 46% increase in revenue and a 65% rise in EPS over the past year. This strong revenue growth is largely driven by the rising need for AI and data center solutions.
Analyst Mike Zaccardi has a hold rating on Super Micro Computer, Inc. (NASDAQ:SMCI). After a strong start to 2024, Super Micro Computer, Inc. (NASDAQ:SMCI) has stabilized and is now near a fair price. Given the potential for seasonal downturns and a neutral chart, he expects the stock to remain at its current levels for the next few months. Super Micro Computer, Inc. (NASDAQ:SMCI) is expected to report an earnings per share (EPS) of $3.87 for fiscal year 2024, up significantly from $2.46 the previous year. By the end of the first quarter of 2024, Navellier & Associates held 41,600 shares of Super Micro Computer, Inc. (NASDAQ:SMCI), valued at $42,017,248. This investment made up 5.17% of their total portfolio, according to regulatory filings.
The Brown Capital Management Small Company Fund stated the following regarding Super Micro Computer, Inc. (NASDAQ:SMCI) in its first quarter 2024 investor letter:
“We are benchmark-agnostic, so we spend our time researching current or potential EGCs, not analyzing indexes. However, this quarter there was inescapable attention on one AI-related company, Super Micro Computer, Inc. (NASDAQ:SMCI), which makes servers that hold NVIDIA Corporation (NASDAQ:NVDA) graphics processing units. Pundits wondered if Super Micro was the next AI “meme stock” set to soar like Nvidia. Super Micro’s stock price was up 255% in the first quarter and indeed is up a jaw-dropping 848% in the last year. Importantly, Super Micro is in the Russell 2000® Growth index, and alone accounted for over a third, or 2.82%, of the index’s 7.58% total return this quarter. However, Super Micro is not a company we could have ever owned. The company generated more than $7 billion in revenue in its last fiscal year, far above our current maximum revenue threshold. In fact, when the company came public in March 2007, it was already too large for our portfolio. Now, the company is so large that it moved into the S&P 500 index at the end of the first quarter. Nevertheless, not owning Super Micro was the largest detractor to our performance versus the index this quarter, comprising more than one-third of our underperformance. This, to us, is a reminder why an index is not always an accurate gauge of our short-term performance.”
Overall SMCI ranks 2nd on our list of the best stocks to buy according to Navellier & Associates. You can visit 10 Best Stocks to Buy According to Navellier & Associates to see the other Navellier & Associates-approved stocks that are on hedge funds’ radar. While we acknowledge the potential of SMCI as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SMCI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Analyst Sees a New $25 Billion “Opportunity” for NVIDIA and Jim Cramer is Recommending These 10 Stocks in June.
Disclosure: None. This article is originally published at Insider Monkey.
