3 Stocks to Get on Your Watchlist

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, I'd be lost when the time came to choose which stock I'm buying or shorting next.

Today is "Watchlist Wednesday," so I'm discussing 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.

Arena Pharmaceuticals (Nasdaq: ARNA  )
Arena, a biotechnology firm focused on treating obesity, has tripled in just the past six weeks as its lead drug candidate, lorcaserin, received an 18-4 nod of approval from the Food and Drug Administration's advisory panel. Although that's not a lock for approval as the FDA is not obligated to follow the recommendations of its panel, it generally serves as a good indicator that lorcaserin is on the right path.

This doesn't, however, mean that Arena is set to trounce the competition, because it still has plenty of obstacles to overcome. Vivus' (Nasdaq: VVUS  ) Qnexa has proven arguably more effective than lorcaserin and may come with less serious potential side effects (which further studies of lorcaserin may either confirm or deny). Qnexa is also on target to be the first FDA-approved obesity treatment in more than a decade. Simply making it to market first could give Vivus a long-term advantage over lorcaserin. Arena will likely also contend with Orexigen Pharmaceuticals' (Nasdaq: OREX  ) obesity drug, Contrave, but in a reversal of roles, lorcaserin should beat Contrave to market by a good two, perhaps three, years.

In a market aimed at trimming the fat, shareholders are looking to get fat eating off obesity drug profits. Arena is an interesting company worth watching at these levels.

Integrated Device Technology (Nasdaq: IDTI  )
The business of integrated circuitry for the communications, computing, and consumer industries is far from glamorous. Often, demand for these products ebbs and flows with the economy, and since economic predictions are about as accurate as weather forecasts, inventory levels are usually impossible to predict beyond a few quarters. Despite this, IDT remains profitable and extremely cheap.

The company itself has generated positive free cash flow in each of the past nine years and currently boasts $325.5 million in cash with no debt (for the moment) -- it's using some of that cash and utilizing debt to purchase PLX Technology for $330 million. For reference, IDT's market cap is only $747 million. In short, the company's products are a play on the continued expansion of our nation's telecommunications infrastructure as well as on computing and consumer network optimization. Growth levels aren't going to be off the chart, and there will be hiccups along the way, but at its current valuation, I feel it makes a compelling buy candidate.

WPX Energy (NYSE: WPX  )
If you've been looking for natural-gas-heavy companies that are being beaten down because of near record-low prices that could rebound, then you may want to give WPX a closer look.

WPX, which has oil and gas reserves in the Piceance Basin, Bakken shale, and Marcellus shale, has been shrinking its focus of late on producing oil and natural gas liquids -- a move that should net the company considerable profits over the next few quarters once its one-time writedowns are out of the way. Just last month, WPX sold off its assets in Texas' Barnett shale region and the Arkoma Basin in Oklahoma to an affiliate for $306 million. The move strengthened its balance sheet and reaffirmed its focus on NGL and oil production, which increased 26% over the year-ago period based on its first-quarter results.

WPX may be an eyesore to look at now given its recent impairment charges and its previously heavy reliance on natural gas for revenue, but the changes it's enacting could translate into surprising earnings beats as early as next year.

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

Don't let your search for great stocks end here. Consider getting your copy of our latest special report: "The Motley Fool's Top Stock for 2012." This report details a company that our chief investment officer has described as the "Costco of Latin America," and it's yours for the low, low price of free -- so don't miss out!

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.

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 (6) | Recommend This Article (5)

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 June 07, 2012, at 1:04 PM, sammievee wrote:

    "Qnexa has proven arguably more effective than lorcaserin and may come with less serious potential side effects (which further studies of lorcaserin may either confirm or deny). "

    The above comment really discredits a blog that otherwise was fine. I consider it neglegent that you suggest "serious potential side effects" for a drug based on nothing but studies that have not occured and the crutch of "maybe". Have you any reason to believe that Locarserin will be associated with "side effects" when previous studies have not identified or suggested side effects?

  • Report this Comment On June 07, 2012, at 1:28 PM, AlanPithy wrote:

    Doh! The FDA PDUFA Date for ARNA's Lorcaserin is apx 2 weeks before VVUS' Qnexa's date, so as it stands now Lorcaserin will likely be the first weight loss drug approved, not the other way around. Qnexa was already delayed once, it may be delayed again, to resolve its Risk Mitigation issues.

    ARNA has its own production facility ready to produce the medication, and they have an experienced partner in Eisai (which is already selling medication to endocrinologists and other weight loss specialists) ready to sell it as soon as they get they get the green light, along with a contracted sales force to reach GPs and other doctors. Qnexa has no sales force behind it, no partner willing to sell it for them.

    As for side effects, are you mad? Qnexa has a laundry list of side effects including lessening the effect of birth control pills and increased risk of birth defects. So not only does it increase the chance of unwanted pregnancies, it increases the chance of unwanted deformed babies! It is a combination of 2 old generic drugs, one of which is an anti-seizure medication known to cause people to lose ability to concentrate. It is colloquially called "The Stupid Pill" for how it makes people feel. The other is Phentermine, a cheap generic amphetamine. Why you think people will pay a premium for a stupid pill and a cheap generic weight loss drug is beyond me.

    That is, if you can find it. Because the company has proposed a Risk Mitigiation program that will restrict the drug to a handful of mail order pharmacies. So Qnexa has no sales force to sell it to doctors, and no pharmacies for patients pick it up. Tell me again how this drug will be a blockbuster? The company itself is making it next to impossible to succeed, because that is the only way the FDA would ever approve such a toxic concoction. But it is obvious why no Big Pharmaceutical company is willing to partner with them to sell it.

    If I recall correctly 6 people had heart attacks on the Qnexa drug trial, probably owing to the fact that they gave amphetamines to people already at risk for CV issues due to their body weight. There were no heart attacks on the placebo. And none on Lorcaserinm which had 3-4 times more people testing it. In fact, the only side effect of Lorcaserin that was meaningfully higher than placebo was a mild headache lasting 1-2 days, that was resolve by taking Advil. Doctors are ethically bounds to prescribe the mild agent first, and once people are on it the odds are good they will see results. 25% of people who took it lost over 16% of their body weight, and 33% lost over 10%, and 66% lost at least 5%. Losing just 5% of body weight reduces risk of heart disease, stroke, diabetes and cancer. That's pretty darn good.

    Lorcaserin works for those willing to work to improve their health. There is no real public interest in giving people amphetamines and stupid pills for years on end, which is why the Risk Mitigation program is so restrictive imo.

  • Report this Comment On June 07, 2012, at 1:58 PM, beatlesforever wrote:

    Your article contains material lies. You should delete this blog. Shame!!

  • Report this Comment On June 07, 2012, at 4:06 PM, krapbuster wrote:

    Regarding ARNA and VVUS see some facts spelled backwards by author so here's some corrections.

    Lorcaserin is the safer drug between the two as well as currently first up to bat for approval with FDA PDUFA June 27th and VVUS Qnexa mid July. As for effectiveness Lorcaserin (Lorquess) does pass FDA guidelines and to start post approval will be combined with generic phen by physicians to provide better efficacy when needed and then reduce or eliminate phen when patient has responded and stabilized. ARNA holds

    Lor-phen patents thru 2023.

  • Report this Comment On June 07, 2012, at 8:15 PM, PhillyDan wrote:

    Effectiveness is a three-legged stool:

    1. Efficacy - Qnexa does show better efficacy against placebo but since it has not been studied against lorcaserin, how can you make a statement that has no basis in fact. In the real World, where there is no placebo, lorcaserin will be just as efficacious as Qnexa. Qnexa also uses two compounds to achieve it's efficacy. Lorcaserin is a single agent compound. If Doctor's prescribed phentermine (one of Qnexa's compound), along with lorcaserin, that combination will probably show more weight loss.

    2. Safety - Qnexa has birth defects' signals. A CV signal for higher HR and over 17 of their side effects were greater than placebo. Lorcaserin has no cancer, CV, or valvulopathy signals in it's human studies. In addition, the only side effect greater than placebo was a mild headache that goes away after about a week of usage.

    3. Tolerability - Qnexa, as I mentioned above has 17 side effects like constipation, tingling of the hands and arms, nausea, metabolic acidosis, etc.

    Lorcaserin has only a mild headache....

    Therefore lorcaserin is very stable and thus more effective, because again effectiveness is more than just having efficacy.

    67% of the lorcaserin patients completing the phase III studies achieved 5% or greater weight loss.

    35% lost greater than 10% of their weight for the completers.

    25% lost greater than 16.7% or 35lbs+. Many patients in the top quartile lost over 50+ pounds.

    Your research on the weight loss drugs is terrible.

    Declaring Qnexa safer than lorcaserin is like saying drinking drano is safer than drinking water!

  • Report this Comment On June 08, 2012, at 9:25 AM, tcalea wrote:

    Topiramate is not the stupid pill, and most patients tolerate it fine. It's dose dependent. As for birth defects, I make sure patients know that no potentially pregnant woman get her hands on it....signing a waiver. That being said I own both VVUS and ARNA. Stop speculating as to how doctors think.

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: 1904343, ~/Articles/ArticleHandler.aspx, 10/25/2014 4:10:50 AM

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