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.
Threshold Pharmaceuticals (Nasdaq: THLD )
Houston, we are go for launch! Threshold Pharmaceuticals has rocketed higher by more than 300% since Feb. 2 because of positive data concerning its late-stage pancreatic cancer drug candidate, TH-302. Although I rarely care to chase positive phase 2 clinical trial results because they are no guarantee of approval, these particular results have me excited.
Clinical trial data released by the company Tuesday showed that when TH-302 is combined with gemcitabine (known as Gemzar and marketed by Eli Lilly (NYSE: LLY ) ), it reduced by 39% the risk of pancreatic cancer getting worse versus taking gemcitabine alone. Best of all, the side effects of the drug were tolerable. A recent string of drug hopefuls has failed to make it past this pivotal mark, with Infinity Pharmaceuticals' drug proving ineffective and combination drug Folfirinox proving very effective but inducing serious side effects. With plenty of room for improvement in late-stage pancreatic treatment, I feel Threshold may still have room to run.
Arctic Cat (Nasdaq: ACAT )
Recently, I looked at sectors that could suffer from the warmer-than-anticipated winter that the United States has "suffered" through (hasn't it been terrible?) and Arctic Cat was a name that popped up on my screen. Although Arctic Cat's third-quarter results didn't seem fazed one bit by the lack of snow, with snowmobile sales shooting up 63% thanks to the addition of 23 new models, I just don't think this can continue.
Snowmobiles need snow -- and there just isn't enough of the white stuff this year for snowmobilers to have an overly positive outlook. While Polaris (NYSE: PII ) also reported strong snowmobile sales, it seems like a much safer all-terrain bet given that snowmobile sales comprised just 22% of its total revenue versus the 60% of sales that snowmobiles made up of Arctic's third-quarter results. There's too much downside risk with this warm weather, and I may be looking to sell shares short.
Monster Beverage (Nasdaq: MNST )
Monster energy drinks apparently come with a monster valuation. The company, which relies on its Monster energy drinks to drive sales, trades at a clear premium to its peers.
Monster is currently valued at 29 times forward earnings, 10 times book value, and 34 times cash flow -- all figures I find too rich even with its five-year growth rate forecast to be 15%. I don't see why investors would pay this sort of premium for a company that doesn't pay a dividend when you could easily slide over to one of the big three sparkling-beverage makers, Coca-Cola, PepsiCo, or Dr Pepper Snapple Group, and receive a yield around 3% and a much more attractive valuation. Buying puts here could be a possibility.
Is my bullishness or bearishness misplaced? Share your thoughts in the comments section below and consider following my cue by using the links below to add these three companies to your free and personalized watchlist to keep up on the latest news with each company.
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- Add Threshold Pharmaceuticals to My Watchlist.
- Add Arctic Cat to My Watchlist.
- Add Monster Beverage to My Watchlist.