3 Stocks to Get on Your Watchlist

I follow quite a lot of companies -- some more closely than others -- so the usefulness of a watchlist to me cannot be overstated. Without my watchlist, I'd be unable to keep up on my favorite sectors and what's really moving the market. Even worse, without my watchlist, I'd be lost when it came time to choose what stock I'm buying or shorting next.

What I intend to do as an experiment is to make every Wednesday "Watchlist Wednesday," where I'll discuss three companies that have crossed my radar in the past week and at what point I may consider taking action on these calls with my own money. Keep in mind these aren't concrete buy or sell recommendations, nor do I guarantee I'll take action on the companies being discussed weekly. What I can promise is that you can follow my real-life transactions through my profile, and that I, like everyone else here at The Motley Fool, will continue to hold the integrity of our disclosure policy in the highest regard.

Idenix Pharmaceuticals (Nasdaq: IDIX  )
My dislike for Tulipmania in the hepatitis C sector is well known. Many saw November's $11 billion purchase of Pharmasset (Nasdaq: VRUS  ) by Gilead Sciences to gain access to Pharmasset's stage 2 clinical trial drug, PSI-7977, an oral treatment that doesn't require interferon injections and the nasty side effects that accompany them, as a huge risk. Then earlier this week, Bristol-Myers Squibb showed perhaps even more desperation by paying a 163% premium for Inhibitex (Nasdaq: INHX  ) , whose leading compound, INX-189, has only cleared phase 1 clinical trials. Now Idenix has tacked on 70% in just the past two trading sessions on speculation that it could be the next takeover candidate.

I'm growing weary of these "one-upping" biotech deals in which none of the purchased companies has, in my opinion, even come close to being worth what the purchasing company has paid. With no experimental drugs currently past phase 2 clinical trials, I am seriously looking at purchasing puts on Idenix. The puts won't be cheap, but I'd be protected from losing no more than my original investment just in case another white knight swoops in and purchases Idenix as well.

Goodyear Tire & Rubber (NYSE: GT  )
I never thought the time would come when I'd consider adding Goodyear to my portfolio, but no one on Wall Street seems to want to give the company any respect. Just yesterday, the stock was hammered for comments its management made about its prospects in 2012. A mixture of supply side problems tied to the floods in Thailand and soft volumes across all regions is negatively impacting the company.

Still, this isn't the same Goodyear that looked like it could be on life support during the darkest days of the auto industry just a few short years ago. This is a company that just last quarter nearly doubled its segment operating income over the year-ago period and increased per-tire revenue by 18%. In addition, Goodyear is still targeting $1.6 billion in operating income by 2013. With its shares valued at just six times forward earnings, I happen to agree with fellow Fool Travis Hoium, who proclaimed yesterday that the stock is worth the risk at these levels.

Blue Nile (Nasdaq: NILE  )
I'm no stranger to making a bearish call on Blue Nile -- in fact, I've done so on multiple occasions. The problem front-and-center with Blue Nile is that it's losing its competitive advantage. Not owning much of its merchandise means it benefits from extremely low overhead costs and can undercut traditional mall retailers in order to lure customers. Unfortunately, this also means that when its input prices are rising and it's forced to pay an even higher price than its competitors for diamonds, its margins get pinched.

Yesterday's earnings warning from Tiffany claiming soft sales in the U.S., and Signet Jewelers' fiscal 2012 EPS guidance falling short of Wall Street's estimates only make it seem more likely that Blue Nile may be in for another rough quarter when it reports. This is shaping up to be a great-looking short-sell candidate.

Foolish roundup
Is my bullishness or bearishness misplaced? Share your thoughts in the comments section below and consider taking my cue by adding these three companies to your free and personalized watchlist to keep up on the latest news with each company.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He's a total nerd when it comes to making lists. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Motley Fool newsletter services have recommended buying shares of Blue Nile and Gilead Sciences. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that believes transparency comes first.


Read/Post Comments (1) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 11, 2012, at 9:48 PM, skypilot2005 wrote:

    The author of this article left the following comment:

    http://www.fool.com/investing/general/2012/01/11/heclas-hang...

    “January 11, 2012, at 2:49 PM, TMFUltraLong wrote:

    What the Hecla man!!! Sorry, couldn't help myself! Yet another reason why I prefer Silver Wheaton.

    TMFUltraLong”

    Sure doesn’t inspire much confidence in his judgment. Just a “drive by” post. No support for his statement.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1756272, ~/Articles/ArticleHandler.aspx, 12/18/2014 6:11:58 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement