I follow quite a lot of companies, 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.
I'm making every Wednesday "Watchlist Wednesday," when 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.
MAP Pharmaceuticals (Nasdaq: MAPP )
The day of reckoning came for MAP shareholders this week, and it wasn't nearly as bad as many had predicted. The company's promising orally inhaled migraine treatment candidate, Levadex, failed to gain approval by the FDA, but it wasn't due to efficacy or adverse side effects. The real concerns were related to the chemistry, manufacturing, and control of the treatment, which should be easily remedied. While delayed, this drug looks like a near-lock for future approval once MAP addresses these issues.
MAP has a collaborative agreement in place with Allergan (NYSE: AGN ) that will allow Allergan the licensing rights to Levadex within the United States. In return, MAP has already received $60 million in up-front payments and is on pace to receive another $77 million from a future Levadex approval, its first approved sale, and sales milestones thereafter. With ample cash in place, MAP is a biotech that should remain on your radar.
Peabody Energy (NYSE: BTU )
There's nothing I enjoy more sometimes than playing the contrarian, and nothing is more contrarian at the moment than jumping on the coal bandwagon.
Coal has had myriad issues over the past few months. China, which is a prime consumer of coal, has exhibited a notable contraction in manufacturing growth and coal prices themselves haven't been favorable. Then, last week, Peabody warned that because of torrential rains and the subsequent flooding of its mines in Australia that ensued, its operations have been affected, which will result in the company coming in at the low end of its original first-quarter forecast of $0.50-$0.75 of earnings per share.
I see this weakness as just another buying opportunity for what continues to be a long-term play on the United States' growing demand for energy. Coal constitutes nearly half of all energy production in the U.S., and Peabody is responsible for producing 10% of all coal used in electrical generation in the United States. Even with lowered projections, it's difficult to ignore Peabody while it's yielding 1.1% and trading at a mere seven times forward earnings.
Lennar (NYSE: LEN )
I still feel like the last housing bear on planet Earth, but Lennar may have just shoved itself ahead of the remaining bottom-feeders in the sector. Yesterday's earnings report from the company showed that its new orders rose 33% and marked the fourth-straight rise in new orders from the company. Although their homes price right around the same mark, the same couldn't be said of KB Home (NYSE: KBH ) , which bombed last quarter as it attempted to raise its prices too early and lost its primary mortgage provider during the quarter.
The key to Lennar's success has been its superior gross home margin which is by far and away the highest in the sector. This isn't to say that these other homebuilders won't turn a profit; it's just that Lennar is doing much more with their bottom dollar. I continue to feel though, that Lennar and all homebuilders are priced for perfect performance and would look to avoid the sector altogether.
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 personalized watchlist to keep up on the latest news with each company.
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- Add MAP Pharmaceuticals to My Watchlist.
- Add Peabody Energy to My Watchlist.
- Add Lennar to My Watchlist.