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 see 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 )
As I highlighted yesterday afternoon, Arena shares seem to be getting a lift after MarketWatch speculated there could be buying interest in the biotechnology company. Arena, which had its diet drug Belviq approved by the Food and Drug Administration last month, could be looking for a pharmaceutical company, in addition to its current marketing partner, Eisai Pharmaceuticals, to help it market what looks like a blockbuster drug on paper. If that's the case, Arena could indeed be a buyout target.
But as I warned yesterday, there are still concerns to be dealt with, even with an FDA-approved drug. The market for Belviq is huge, with 35% of the U.S. population considered obese, but it'll still require that the drug be priced properly, launched effectively, and prescribed by physicians. Safety concerns are still a residual overhanging factor that could threaten some of Arena's value. Finally, competition from VIVUS' Qsymia (brownie points if you can pronounce that correctly) could engage the two in an all-out price and ad war which could hurt margins for both companies. Without a doubt, Arena is intriguing, but there are still plenty of after-approval questions left to be answered.
Silver Wheaton (NYSE: SLW )
OK, I admit it... I throw Silver Wheaton on the watchlist almost every quarter, but it somehow gets ignored. Let me give you a few more reasons why you've been foolish (with a small "f") to ignore the silver mining giant for so long.
Silver Wheaton reported its second-quarter results last week and, for the most part, it was business as usual. The company's silver equivalent production rose 10% to 6.7 million ounces, with the company ending the quarter with 798 million ounces of proven and probable reserves. I'd like to think production is only going to increase from here as silver prices rise, but at this pace, Silver Wheaton has 30 years of production still left under its belt, assuming no additional deals are made. That in itself is insane.
Silver Wheaton ended the quarter with a net cash position that crossed $1 billion, and it slightly boosted its quarterly dividend payout 11% to $0.10 from the previous quarter. That payout only represents 20% of the operating cash Silver Wheaton generated during the quarter! Furthermore, Silver Wheaton's long-term contracts pushed its cash costs down to a ridiculous $4.06 per silver ounce. That is just an insane margin right there! Do yourself a favor, and if there's only one metal resources company you plan to watch, make it Silver Wheaton!
Things are looking even rosier for Skyworks Solutions, a manufacturer of connectivity chips for mobile devices, following a slam-dunk earnings report from Cirrus Logic (Nasdaq: CRUS ) last month. Cirrus, which is responsible for making audio amplifiers for Apple's iPhone, projected that its sequential quarterly revenue growth in the third quarter will be in the range of 70% to 90%! Go ahead, pick up your tongue, I'll give you a moment to collect yourself. This means cheers all around for Skyworks, because Cirrus Logic derives about 70% of its revenue from Apple. The guidance boost should mean that the iPhone 5 is expected to storm the market shortly and sales should be astronomical.
However, Skyworks isn't a one-trick pony. It has deals with all major phone producers including Apple, Samsung (which extended its global market share lead over Apple this quarter), Nokia, and Research In Motion. Between its vendor diversity and the fact that smartphones are getting more affordable for the average consumer, the demand for Skyworks' connectivity products could soar.
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 companies to your free personalized watchlist to keep up on the latest news with each company:
- Add Arena Pharmaceuticals to My Watchlist.
- Add Silver Wheaton to My Watchlist.
- Add Skyworks Solutions to My Watchlist.
Without question, Apple and Arena have products that, in their own right, have the potential to change the way we live. Realizing this, our team of analysts set out, in our latest premium research reports on Apple and Arena Pharmaceuticals, to dissect both companies from every angle to give you an unbiased look at the opportunities and pitfalls that could move each stock. For less than a week's worth of coffee, you can get your investing edge on these market-moving stocks. Click here to get your premium report on Apple, and click here to get your premium report on Arena Pharmaceuticals.