| Investors say, "Show me the money" … abandon stocks without revenue … the long lessons about investing in stocks with solid fundamentals
Whether You Have $500 or $5 million…READ THIS 99% of Americans don’t know about this… And it could mean a “make or break” scenario for them in 2022. Click here to find out more. SPONSOR | Sipping coffee Friday morning, I caught a story in The Wall Street Journal about “Where Meme Stock Investors Are Now.” I was hoping to see stories about folks who sold near the top and made a ton. Of course, what I got was a mixed bag. Some still have faith in stocks that have suffered big downturns. At least one investor expressed that he has learned his lesson. He lost thousands investing in ContextLogic Inc.(WISH), after a tip from a cousin. After that investment body blow, he realized all his gains on Gamestop (GME) and AMC (AMC) were probably just luck. They weren’t based in fundamentals and research, but instead on emotions and sentiment. ***It’s difficult not to act emotionally with money We’ve written a lot in the Digest about how easy it is to let emotions sway your investing decisions. But we’re also the first to admit that acting unemotionally is not easy. Especially after the market run we’ve had over the last three years, followed by this painful downturn. Over the last three years, many speculative stocks – those without a ton of revenue – have really excelled in the super-low interest rate environment. Many of these less mature businesses are small caps and still developing new lines of business. If they have revenue at all, it comes in very few channels. But this week the Federal Reserve confirmed that they are going to raise interest rates several times this year starting in March. And that, plus high inflation numbers, has led to big losses for speculative stocks. From The Wall Street Journal this earlier this week: Companies making up 31% of the Russell 2000 were unprofitable as of the end of 2021, according to an analysis from Jefferies of earnings over the previous 12 months. By contrast, 5.7% of the Russell 1000 index of larger firms was made up of companies without earnings. That disparity has been apparent in the performances of the indexes in recent weeks. Even with a stronger start to the week than other major U.S. stock indexes, the Russell 2000 has dropped 18% since its record close in November. The Russell 1000, by contrast, is down 9.6% from its record, according to FactSet. So, where have investors turned? Back to businesses with solid fundamentals. This isn’t exactly surprising behavior, especially to a legendary investor such as Louis Navellier. For newer Digest readers, Louis is a legendary quantitative investor. “Quant” simply means he uses numbers and algorithmic rules to guide his investment decisions. Forbes even named him the “King of Quants.” Missed Bitcoin? Something 200X Bigger Is Coming Charlie Shrem got in on bitcoin under $5… before it exploded 900,000%. Now, he wants to let people in on an opportunity he believes could be 200X bigger than bitcoin. Just click here to watch his latest trade “on air.” SPONSOR | ***How a quant picks stocks Louis has spent the better part of the last 40 years working on a quantitative system to pick stocks based on strong fundamentals. Here is his explanation from his service focused on small cap stocks: Breakthrough Stocks. That’s why I study data on almost 5,000 stocks every week, focusing on eight “fundamentals” in particular. These measures of a stock, when taken collectively, can accurately tell you whether a company is doing well. It’s simple—any business that is selling more of its products, running efficiently and making more money is more likely to see continued success. This last downturn has provided some great examples of the power of investing based on solid fundamental numbers, instead of just emotions or tips from your cousin. Recently, one of Louis small cap picks, Alcoa Corporation (AA) reported blowout earnings. From Louis update to Breakthrough Stocks subscribers. First, for the fourth quarter, Alcoa reported its highest quarterly revenue in three years. Fourth-quarter revenue jumped 39.6% year-over-year to $3.34 billion, up from $2.93 billion in the same quarter a year ago. Analysts were expecting revenue of $3.36 billion. Fourth-quarter adjusted earnings surged 861.5% year-over-year to $2.50 per share, compared to $0.26 per share in the fourth quarter of 2020. Analysts were looking for adjusted earnings of $1.96 per share, so Alcoa posted a 27.6% earnings surprise. Even in this down-market environment, stocks with these kinds of numbers continue to do well, as you can see from the AA chart for the last year. 
Louis shares all the results of his fundamental analysis with his subscribers. Below is how AA scores today using his proprietary stock picking system, where stocks get graded on the familiar A to F scale. 
The stock is up about 50% from when Louis recommended it to his Breakthrough Stocks subscribers in June 2021. As you can see from the grades above, the growth story looks to have real legs. FREE STOCK PICK: My Next Stock Surge Supernova? Big Winner? If you invested in Netflix after Louis Navellier’s research firm recommended it, your $5,000 “bet” could have morphed into $2.2 million today. Now he’s releasing his next potential “Millionaire Maker” stock and ticker symbol – for FREE! Click here for more info. SPONSOR | Before I sign off, let’s be clear about investing in meme stocks. If you have the stomach for a crazy ride, it can be a fun and profitable way to invest. My colleague Jeff Remsburg and I often commiserate about how we wish we’d put just a couple of hundred dollars into some meme stock that shot up to major heights. But when the market does a u-turn and heads south, stocks with solid revenue streams and institutional buying pressure will always rebound first because they are more likely to be strong from top to bottom. Money that exits speculative investments flocks back to stocks with great earnings. Enjoy your weekend, Luis Hernandez
Editor in Chief, InvestorPlace | 
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