Some stocks are one-hit wonders, making a big splash when they first appear, then quickly fizzling into obscurity or oblivion. But for other stocks, that initial big move is only a preview for even bigger and better gains to come.
Today, we've listed three stocks that made some of the biggest upward moves over the past month, then paired them with the ratings issued by our Motley Fool CAPS community. The higher each stock's rating, the greater CAPS members' faith in that company's ability to keep on beating the market.
|Aastrom Biosciences (Nasdaq: ASTM )||191.7%||*|
|Uranium Resources (Nasdaq: URRE )||86.7%||*|
|Avanir Pharmaceuticals (Nasdaq: AVNR )||48.3%||*|
^From Oct. 7 to Nov 5.
Before we get shaken out, let's see why the CAPS community thinks some of these companies might continue to outperform the market.
A mighty temblor
The run-up in Aastrom Biosciences' stock has failed to convince some of the most highly rated CAPS All-Stars, because its experimental adult stem cell therapy is still early in the game. Despite having received fast-track status and having submitted a pivotal stage clinical trial proposal for review by the Food and Drug Administration, CAPS biotech guru zzlangerhans remains uninspired:
I think it is unlikely that the results reported on November 18 will support the current inflated enterprise value of the stock. Interim data from the same trial reported in February 2010 was uninspiring and overall results from stem cell therapies have been very disappointing. I don't expect Aastrom to be the first company to report significant efficacy of a stem cell therapy in tissue healing.
There might be some sense to taking a wait-and-see approach. sanofi-aventis (NYSE: SNY ) ran trials for critical limb ischemia and failed miserably, and there will be a rather long wait for the trials to be completed.
CAPS All-Star UltraLong concurs, saying the valuations being assigned the biotech are out of proportion to what investors can expect anytime soon:
We've seen this before from Aastrom and countless other biotechs. Bunch up a couple of news stories about your clinical trials, wait for the volume and kapow to the upside. Aastrom has rallied about 160% from its range last month yet they aren't any closer necessarily to turning a profit. In fact, I'd predict that sometime in the next few weeks Aastrom will once again dilute shareholders with a secondary. They're trading over 1000 times their puny royalties, 6 times book and have perhaps 15 months worth of cash left. We've seen this dance before and historically you bet against the spike about 3 weeks into it, so here we go!
Let us know on the Aastrom Biosciences CAPS page whether you agree there's plenty of time to see whether there's anything to this biotech before committing real dollars.
A sunny disposition
It was just a month ago that Uranium Resources appeared as a top performing stock based on its settling a dispute over a New Mexico project and regaining compliance with Nasdaq exchange listing rules. In fact, the whole sector has been charged up by the third-quarter results of Cameco (NYSE: CCJ ) , which said it expects to double its annual uranium production by 2018.
Uranium Resources experienced some exceptional volatility, sometimes rising and falling on no news, but the uranium miner looks poised to grow further given strong pricing and a deal with Cameco for an exploratory property in south Texas. Cameco and Uranium Resources have also agreed on an option for a joint venture on the property. CAPS All-Star member tinybrain agrees this is a great opportunity:
Some new drilling is providing good results, plus the expansion into West Texas leads me to believe a larger uptick is in the works.
You can follow along by adding the stock to your watchlist and have all the Foolish news and analysis gathered together for you in one place.
A speedy opportunity
With the FDA in no mood to approve drugs with potentially dangerous side effects, there was a lot of consternation it would reject Avanir Pharmaceuticals' Nuedexta, which treats pseudobulbar affect (BPA), which is characterized by uncontrolled laughing or crying due to underlying neurological disease such as multiple sclerosis or amyotrophic lateral sclerosis (ALS).
They needn't have worried. The FDA gave Avanir the green light. Since it will be used in conjunction with Copaxone from Teva Pharmaceutical (Nasdaq: TEVA ) and Avonex from Biogen Idec (Nasdaq: BIIB ) , it won't suffer from competitive pressures either. Nuedexta is the only drug approved for the condition, though admittedly it's a small subset to target.
CAPS member emptygestures thinks there's a reason Avanir has the market to itself, and it's not a good one:
Sell on the news... I bet this eventually gets pulled off the market. Ya it's the first drug of its kind for a reason. Just like restless leg syndrome, no one will be using it.
Although there's a lot of doubt in the CAPS community (one-third of those rating the stock think it will underperform the market), members remain generally bullish about its prospects. Be sure to add it to the Fool's free portfolio tracker, and see whether investors will be laughing all the way to the bank on this one.
Shake, rattle, and roll
With these stocks shaking the market this past month, it pays to start your own research on them at Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page.