Editor's note: An earlier version of this article confused the different clinical trials of CDX-011 and CDX-110. The Fool regrets the error.
Despite all of Wall Street's conflict and contention, a fortunate few companies enjoy unanimous support among professional analysts. If the market's movers and shakers all believe these companies will beat the long-term averages, well, surely they will -- right?
Not so fast! With help from the 180,000 members of Motley Fool CAPS, we'll see whether these highflying favorites deserve analysts' unwavering support. But just because Wall Street loves 'em doesn't mean you have to. Analyst sentiment is just the jumping-off place for your own research.
No. of Analysts
CAPS Rating (out of 5)
52-Week Price Change
|Celldex Therapeutics (Nasdaq: CLDX )
|Cliffs Natural Resources (NYSE: CLF )
|Exide Technologies (Nasdaq: XIDE )
|Taseko Mines (NYSE: TGB )
|Westport Innovations (Nasdaq: WPRT )
Connecting the dots
Positive developments surrounding midstage clinical trials for a novel cancer treatment have investors in Celldex Therapeutics hopeful that the biotech will continue padding on the gains. Celldex reported Interim results last month from a midstage trial of CDX-011 that showed it reducing tumors in patients with advanced breast cancer. Some 19% of the patients taking it showed improvement, compared with 14% of those on chemotherapy. In addition, Fool blog contributor Mike Volkin recently pointed to a different drug in development, CDX-110 or rindopepimut, which is now in phase 3 trials for treating brain tumors. The stock has surged more than 143% from its 52-week lows and underscores the enthusiasm Wall Street feels for the biotech.
Coal miner Cliffs Natural Resources hasn't been nearly as lucky, operating in an industry that's reeling from the impact of stricter regulation and lower prices from competing sources of fuel. Because natural gas is at its cheapest level in decades, utilities are switching from coal to gas. Coal prices have fallen as well, particularly for thermal coal, but new air-pollutant regulations from the EPA are encouraging utilities to convert from coal to natural gas, so there's little incentive for them to build coal-fired plants. Cliffs is having a buy one-get one sale on its stock as shares have been cut in half following its decision to reduce its coal output, so it might be hard to see where analysts are finding the catalyst for growth. Yet at just four times earnings and trading at less than its sales, the stock is cheap, particularly when compared with what analysts estimate growth to be.
Exide Technologies -- which makes traditional lead-acid batteries and not those fancy, new lithium-ion ones -- is in the midst of a turnaround. From capacity reduction to streamlining operations and cutting expenses, Exide is in the process of right-sizing its operations. While a warm winter sapped sales strength -- 67% of its sales are aftermarket batteries, meaning it counts on having Old Man Winter kill off more than a few -- analysts are probably counting on a difficult new car market and a return to normal weather patterns for a resurgent Exide. New car sales have steadily fallen each month this year, indicating that the warm weather also pulled sales forward, while a difficult economy means car owners will continue hanging on to their older models. Good news for Exide, not so much for Ford and GM.
Copper prices have fallen pretty steadily the past two months, adding to the woes facing Taseko Mines, which has had to deal with the closure of a mine, lower-grade ore from other projects, and timing issues on shipments. But there's hope that copper will rebound as healthier-than-expected housing data gave the market a jolt, and if Europe can at least look like it's trying to get its financial house in order, that could provide further support. Add in China's restocking of copper inventories, and we've actually seen a small uptick in pricing recently. Foolish writer Karen Rogers sees opportunity in Taseko, noting that its "untapped ore deposits are quite impressive" at its Harmony and Prosperity projects. Having beat analyst expectations on revenue last time out, it may just be a matter of time before the rich patina it represents is realized.
Where Cliffs felt the ill effects of plummeting natural gas prices, that has provided the impetus behind the rise of Westport Innovations, whose stock has risen around 300% over the past three years or so. Plentiful supply, flush inventory, and new drilling technologies make access to this once hidden asset possible. Westport makes engines that run on natural gas.
But the golden goose may get killed. The EPA is ready to promulgate rules by year's end that will regulate hydraulic fracturing, the process that has enabled drillers to reach previously trapped deposits. Fracking, as it's called, hydraulically pumps fluids into rock formations under high pressure that cracks -- or fractures -- the rock, allowing the oil and gas within to flow. Although the science is nowhere near settled, activists have demonized it, accusing it of causing flaming faucets and even earthquakes.
One can hardly imagine that EPA regulations have a positive effect on the business; they might even serve to snuff out a nascent industry. As natural gas vehicles are only just gaining traction -- commercially they're already viable, and consumer models are the next to come -- reducing the dramatic price disparity between oil and gas will only put the brakes on their development.
Yet nothing happens fast in Washington, and there's still plenty of drive left to expanding the opportunity. That's why I've rated Westport to outperform the market on CAPS, as it's become my best-performing stock of all time. Tell me in the comments box below or on the Westport Innovations CAPS page whether you think the looming regulatory deadline poses a high hurdle for the alt-fuel leader.
Agree to disagree
As exciting as the natural gas opportunity is, Fool analysts think they've found an energy stock with just as much upside. You can read about it in their new free report, "The Only Energy Stock You'll Ever Need." You can get your copy for free.