VFC's Stock House Weekly Stock Watch, Week of 17 December
This week's stock watch list of hot stocks to watch includes: Weekly Stock Watch, Week of 17 December: AAPL, RIMM, GE, F, CPST, C, TROV, AMRN, VNDA, TTNP, NVS, FCEL, D, RIMM, GILD, YMI, TROV, ONVO, PFE, UTHR
This week, VFC's Stock House, an information and research outlet that brings ideas and opens discussions to a broad spectrum of investors, examines multiple stocks in various sectors that made news during last week's trading, and could do the same this week, too.
A full version of this week's report is available by visiting: http://VFCsStockHouse.com
The markets edged lower on Thursday and Friday of last week, indicating that investors may be losing faith that a deal can get done - even one that would postpone a final decision and temporarily halt the tax cuts and spending hikes that would be implemented come 1 January.
Another factor that could come into play for the remainder of the year is capital gains selling. Because capital gains taxes could be slated for a significant bump, investors may take advantage of bailing out under the 2012 rate, rather than take an additional tax hit next year. Many analysts, especially those that favor higher taxes, argue that investors would not sell for that reason alone, but others speculate that capital gains considerations are a large part of why Apple (AAPL) shares have been on the rapid decline over the past couple of weeks. Looking at it objectively, however, Apple is also facing much stiffer competition in the smartphone market that is about to also introduce Research In Motion's (RIMM) BlackBerry 10.
As negotiations continue to play out, here are a few stocks and stories to keep an eye on this week...
General Electric Announces Boost in Dividend and Revised Share Buyback Plan
Although shares of General Electric (GE) closed the day unchanged on Friday, the company was full of good news for investors leading into the new year. Come January of next year, according to a Friday announcement, the dividend rate for GE shares will jump by twelve percent to nineteen cents per share, while the company also announced plans to boost its share buyback program by ten billion dollars. Both moves, according to Chief Executive Jeff Immelt, are intended to return cash to shareholders. The two moves also help to negate the dividend cut and issuance of new shares that took place in the wake of the financial meltdown of 2008-09, which resulted in GE shares trading for under ten bucks at the time. A revival in GE Capital has helped to spark the cash flow that will allow the company to implement these plans, although GE also looks to reduce exposure to its financial services division, given the huge hit it took during the crash of a few years back. The share buy back will extend into the year 2015. Already THE global conglomerate that touches many different sectors of the economy, GE may have again offered investors a reason to stick a few more shares of the company in the long term or retirement portfolio...
Apple Continues its Decline
Apple shares continued their rapid decline on Friday, dropping by nearly another four percent and hitting intra-day lows of just over five hundred bucks per share. As mentioned above, many may have decided to sell based on expectations of higher capital gains taxes next year, but there is also concern of growing competition in the smartphone market. Apple has also not 'wowed' consumers with a new product lately, preferring simply to re-size or re-brand existing technology and offer updated models as often as most people change their undergarments in hopes of keeping consumers re-paying for pretty much the same product. The iPad-mini, for example, essentially competes with Apple's other product offerings and the initial reception of the iPhone 5 may be an indication that consumers are finally catching on - and not falling prey to - the "gotta have the latest model" hype. It also may be no coincidence that RIMM shares have doubled while AAPL has fallen, given the pending release of the BlackBerry 10. Just as quickly as BlackBerry became a thing of yesterday in America, so, too, can the iPhone as new and revived brands hit the market with just as much fanfare.
APPL also took a hit on Friday due to a downgrade from Citigroup (C), which lowered its rating from 'Buy' to 'Neutral' while also cutting the price target to $575 from $675...
Healthcare, Biotech, Pharmaceutical:
TrovaGene Pushes Through Six
TrovaGene Inc (TROV) shares continued to surge on Friday and pushed through the six dollar mark after having gained momentum during the trading days prior. Volume also spiked and came in at more than five times the daily norm. The company had been gaining increased attention this year due to its diagnostic technology that could potentially identify markers for specific cancer types through simple urine tests, and with some of those tests nearing the commercial stage, Aegis Capital initiated coverage of the company with a rating of 'Buy' and sparked the late-week rally. With a one-day spike of ten percent on Friday, TROV also made the Nasdaq 'largest percentage increases' list, likely attracting even more interest to the company. Investors will be looking this week to see if TROV is ready to hold its gains. Multiple of the company's diagnostics are slated for commercialization in 2013, the first of which - a diagnostic able to detect KRAS mutations through urine samples - is expected achieve that milestone this coming January.
With price and volume rising at such an impressive rate, investors could expect some day, swing and momentum traders to play a part in any pending volatility, but those looking to take advantage of this technology's potential could look to play any dips moving forward. TrovaGene's technology is advancing to the latter stages at a time when global health care trends are searching for cheaper and less-invasive ways to replace standing procedures and that makes TROV a stock to watch during the closing days of 2012 and into the new year of 2013.
Should the technology gain quick acceptance on the open market, it's likely that partnership and/or buyout talk could creep up and boost the collaborative efforts already realized by the company.
Another Patent For Amarin
Amarin Corporation (AMRN): As usual, it's tough to discuss this sector without throwing in an update regarding Amarin. Although shares modestly rebounded at points last week, they closed the day at below the nine dollar mark again as investors continued to await news on Vascepa's New Chemical Entity (NCE) status. A mid-day price spike on Friday indicated that investors are watching the wires for any relevant update and are prepared to act quickly and accordingly, but the NCE news has yet to materialize. Amarin did announce last week, however, the issuance of yet another patent from the United States Patent and Trademark Office (USPTO) based on the MARINE clinical trial results. It has been previously argued by the company that enough patent protection was being built, with or without NCE, to ward off any potential legal challenges, although it has also been indicated that NCE is a relevant issue in regards to a potential buyout or partnership. While anything can happen at any given time in this game, it's a relative given that few - if any - expect anything but the go-it-alone (GIA) strategy to reach fruition next quarter, especially without NCE.
Over the mid to long term AMRN could rebound as many still believe that Vascepa is an eventual billion dollar drug, but over the short term shares could remain depressed if GIA remains the preferable course of action for the pending launch. Since it's a trader's market where less and less are playing the 'buy and hold' game, that fact could weigh heavily on investor patience.
Vanda Denied In Europe
Vanda Pharmaceuticals (VNDA): Vanda launched Fanapt in the United States for the treatment of schizophrenia with the help of partner Novartis (NVS)a few years back, but the US launch failed to meet expectations and shares have since declined to under five bucks. VNDA took another hit last week when the company announced that the product (known as Fanaptum in the EU) had received a negative opinion from the European Medicines Agency's (EMA) Committee for Medicinal Product for Human Use (CHMP) recommending against approval of Fanaptum. Shares dropped by roughly three percent on the news, but had been declining since the summer months anyway. Given the disappointing US roll-out, investors were looking towards a European approval as a potential catalyst to inject some renewed life into this stock, but that potential looks to be on hold, at least for the time being. Vanda plans to appeal the EMA decision.
A portion of Vanda's revenue goes to Titan Pharmaceuticals (TTNP) due to a long-standing licensing agreement, but Titan has used its share of the Fanapt revenues as leverage in obtaining financing from Deerfield Management. Titan shares spiked by seven percent on Friday, although for reasons not related to the Vanda news.
FuelCell Spikes On Dominion Deal
FuelCell Energy (FCEL): Shares of FuelCell Energy spiked by over seven percent on Friday when news hit the wires that the company, in collaboration with Dominion Resources (D), would develop the largest fuel cell power project in North America. The deal, according to Bloomberg reporting, increases the company backlog of orders to over $125 million and is a testament to the company's growing potential of supplying a significant power source independent of the grid. What has plagued this company for some time - and resulted in a dramatic share price drop from this year's highs - is the slow roll towards profitability. Like Capstone Turbine, another company in the sector which is developing clean energy microturbine units, investors have yet to embrace that profitability may be within reach over the short to mid term, compelling many to simply use the stock as a trade, rather than as a hold. Such activity leads to increased volatility and price fluctuations but also allows for accumulation and numerous trading opportunities...
Shares of Research In Motion (RIMM) began a furious rebound last month when National Bank analyst Kris Thompson revised his price target of the company to $15, up from a previous target of $12, right about the same time Jefferies & Co. also raised its target on RIMM. The move higher and the positive reinforcement from analysts was a clear sign that the company had fallen back into the good graces of investors as the pending release of the BlackBerry 10 quickly approached. Another six percent move higher on Wednesday placed RIMM shares as a clean double since their September lows. Not a bad rebound story. Given that shares have jumped that high so quickly, however, investors may look to take some profit from the table. While the RIMM stock price rebound has been a solid one supported by analyst attention, the company still needs to prove that it will be able to execute a rebound in BlackBerry sales in a tough smartphone market - and that will be no easy task. To do so, RIM is essentially going back to its roots - business enterprise - before all-out targeting the consumer market again. BlackBerry still remains a very popular brand overseas, but it has lost luster in the US with the rise of Galaxy, Android and iPhone technology. Gaining traction in business again could give the company the foundation to launch a revival of its brand. It may be unrealistic to expect this stock to achieve its past highs anytime soon, but a better-than-expected launch combined with some hype may be able to push shares towards the twenty dollar mark, but it'll also be wise to watch out for some profit-taking leading into the close of 2012.
Healthcare, Biotech, Pharmaceutical:
Positive Coverage Initiated on TrovaGene
We mentioned TrovaGene Inc (TROV) yesterday as a stock to watch because of its double in price over a relatively short period of time and also the company's pipeline of diagnostic tests that have demonstrated the ability to effectively detect the presence of various cancer types and infectious diseases through simple urine samples. Shares jumped again on Wednesday by over six percent when Aegis Capital initiated coverage of the company with a rating of 'Buy.' The announcement likely attracted some new investor interest as volume jumped to nearly double the daily norm. The encouraging analyst coverage is likely related to the pending commercialization of a few of TrovaGene's diagnostic tests set for 2013, the first of which - a diagnostic able to detect KRAS mutations through urine samples is slated for a January 2013 launch. As another Seeking Alpha author noted on Wednesday, too, TrovaGene's patent portfolio may hold a very significant inherent value in itself, paving the way for more lucrative partnership discussions if the market begins to accept the technology on a broad scale. With commercialization pending over the near term, a growing pipeline of potential and with enough cash on hand to last well into 2013, TROV may have some more room to run. Volume to this point is not on the scale that indicates widespread attention just yet.
Organovo Holdings Holding Steady Through Market Volatility
Another company developing a novel and potentially ground-breaking technology is Organovo Holdings (ONVO). While the markets have been moving significantly higher and lower during over the past weeks in line with the news releases of the day, ONVO has held fairly steady without much fanfare. Volume has been more volatile than price during that time, however, indicating that some investors may be building or consolidating positions in preparation for a potentially active 2013. TrovaGene has developed the NovoGen MMX Bioprinter, a technology that uses live human cell samples to generate 3D "bioprints" of human tissue. Once generated, these 3D prints can then be used as disease models that enable therapeutic drug discovery and development. With the ability to print living tissue in desired shapes and functions, Organovo could potentially put this technology to use in generating organs for patients awaiting transplants, further on down the road. In developing a technology with such scientific implications, Organovo has already enlisted the collaboration of both Pfizer (PFE) and United Therapeutics (UTHR). The evolving relationships of both partnerships will be worth watching moving into the new year as UTHR currently retains the option to acquire a license from Organovo in relation to the results of the ongoing collaborative effort. Such a license - if the option is enacted - would provide Organovo with up-front cash money and a future revenue stream from royalties paid...
Roundup: Aside from the cliff negotiations, it could be a slow week. Not much is expected in terms of economic indicators so it'll be a week of headline watching and playing some trades, should they come up. As the days inch on - and with 2012 working days in Washington dwindling down to nothing - then investors will be getting more and more nervous at the prospects of the fiscal cliff being implemented. By voting in November to keep the powers-that-be in Washington at status quo on both sides of the isle, voters essentially put it to the task of the politicians to find some middle ground; now let's see if the egos and affiliations can be put aside to come up with a plan that the people want. In closing, let's take the time this week to remember those that need remembering and to appreciate family and friends the way we should - too often these days are we forced to remember that mortality is all too fragile. Quickly, it puts things into perspective, at least for those who pay attention.
Disclosure: Long AMRN, GE, CPST, FCEL, TTNP.
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About VFCsStockHouse.com: VFC's Stock House is an information and research outlet that brings new ideas to the table and opens discussions for a broad spectrum of investors, with a strong focus on - but not limited to - biotech stocks, biopharma stocks, and pharmaceutical and healthcare stocks. VFC's Stock House provides individual company profiles, write-ups and reports as well as giving general insights into broader-market news through various 'Stock Watch' lists. At the conclusion of most weeks, VFC's Stock House issues a "Weekly Stock Watch" that examines news items, stocks and stories that made headlines during the previous trading week, but may also make headlines or influence trends during the upcoming week as well. The information contained within the pages of VFC’s Stock House are not intended to be taken as advice, but as a starting point where investors can follow up with their own DD and devise their own entry and exit strategies.
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