Wall Street fawns over the companies listed below. So why do our Motley Fool CAPS members disagree? They've tarred these stocks with one- and two-star ratings, signaling their lack of faith that the associated companies will outperform the market.
So who's got it right? The professional class of analysts sitting in their paneled offices smoking stogies, or a motley crew of community investors pooling their best thoughts for others to share? We think we know who'll come out ahead. How about you?
|
Stock
|
CAPS Rating
(out of 5)
|
Wall Street Bullish Sentiment
|
| China MediaExpress (Nasdaq: CCME ) |
** |
100% |
| Human Genome Sciences (Nasdaq: HGSI ) |
* |
100% |
| XOMA (Nasdaq: XOMA ) |
** |
100% |
Source: Motley Fool CAPS.
Now as much as we love our CAPS community, don't sell these companies short just because they've garnered the lowest opinions. And don't buy 'em just because Wall Street says to either. Investing requires closer diligence on your part, so use these ratings as a launching pad for your own research.
A heavy burden
There's nothing like an allegation of accounting fraud to send investors running for the exits. China MediaExpress happens to be the latest Chinese small-cap stock being put in the stocks in the public square to have rotten tomatoes tossed at it. Citron Research got the ball rolling; Bronte Capital and Muddy Waters also waded in. It's noteworthy that the number of shares short on the media outfit was running pretty high in January.
The stock was in free fall until China MediaExpress released a statement denying the charges, which caused the stock to rally 20% Friday. Rivals VisionChina Media (Nasdaq: VISN ) and Focus Media (Nasdaq: FMCN ) have been benefitting from the situation.
Sentiment has certainly turned against China MediaExpress, but CAPS member JZ09 believes having Deloitte as its auditor ought to alleviate some investor concerns. But JZ09 notes other potential problems:
The main issue that keeps me up at night is the complex relationship between CCME and the operator, a related party to the CCME founder; is that contract secure etc? Why is the contract necessary etc? If anyone can shed factual light on this issue, I would greatly appreciate.
For me the stock is a BUY. If it is a fraud, downside of 100%. If not - upside of 1000% . If you could invest in 10 CCMEs and half were frauds, you would smash the market over time.
Let us know on the China MediaExpress CAPS page whether you're a buy or sell on this stock.
A fat opportunity
Positive results from its lupus drug resurrected Human Genome Sciences from the dead last year, but the company now finds itself with one foot in the grave again and has preemptively sued drug giant Roche to fend off a possible patent lawsuit related to Benlysta. The FDA is set to make a decision by March 10 on whether Human Genome Sciences and partner GlaxoSmithKline (NYSE: GSK ) can put the drug on the market.
Of course, there's a good reason Roche might want to go after it. It represents the first new lupus therapy to hit the market in 50 years, which makes me wonder: If the drug is so "obvious," as Roche is expected to argue, then why hasn't it been done before?
While all indications are that it will get the FDA go-ahead, Human Genome Sciences still faces the prospects of competition from Immunomedics (Nasdaq: IMMU ) and others. CAPS member Bigdog2020 isn't concerned, though:
May have the first drug for Lupus that the market has seen in a long, long time. Minor safety hoops to [jump] through, but should make it through OK. Will reeval in 6-12 month for further market outperformance...
Add Human Genome Sciences to the Fool's free portfolio tracker to have all the news and analysis about the biotech aggregated for you in one place.
Construct an argument for growth
Biotech XOMA seems to have the same problems besetting both China MediaExpress and HGS: It's got a growing number of short-sellers piling into it, while at the same time possessing what may be the best diabetes treatment, at least according to one analyst.
While the CAPS community seems to side with the chances that the biotech's experimental XOMA 052 will be a winner, its low two-star rating suggests they think there's enough risk associated with it that your money might be better spent elsewhere. Add XOMA to your watchlist then head over to the XOMA CAPS page and let us know whether this is an experiment worth conducting.
What's wrong with that?
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Sign up today for the completely free service, and tell us which side of the street will be the ultimate winner.
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