3 Humongous Health-Care Stocks This Week

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Despite plenty of big losers in health care this week, the sector also saw its fair share of winners. Here are three of the most humongous health-care stocks of the week.

Low to High
Just one week after making our list of horrendous health-care stocks, Hi-Tech Pharmacal (UNKNOWN: HITK.DL  ) bounced back in a big way, by climbing 18% for the week. And the company did it the old-fashioned way. It earned it. 

Hi-Tech reported surprisingly good quarterly results on Dec. 6. Earnings per share came in at $0.66 per share, blowing away analyst estimates of $0.52 per share. Although the numbers were better than expected, they also fell short of last year's figures. Hi-Tech partially attributed its year-on-year earnings decline of 35% to Hurricane Sandy.

This week's action more than made up for Hi-Tech's 11% drop last week. The dip stemmed from an analyst downgrade and a short-seller's report predicting a poor earnings release. That prediction, of course, fell short of hitting the mark.

In the clouds
Cloud-based physician software company athenahealth (NASDAQ: ATHN  ) jumped 13% this week. The company's relatively positive outlook for 2013 sparked the rise in shares.

The numbers for 2013 weren't overly rosy. Ranges given for adjusted income and revenue actually were a little lower than analysts expected. However, the company continues to grow revenue around 30% each year. Anything in that ballpark appears to be enough to keep investors happy.

The Massachusetts-based technology firm's stock still has quite a way to go before it regains its September levels, though. Shares began a slow slide in early October that picked up downward momentum considerably after athenahealth reported quarterly results on Oct. 18. Despite rebounding by nearly 28%, the stock needs to climb another 24% to get back to where it was trading a few months ago.

Best but worst
An 8% gain in one week usually wouldn't qualify as a humongous return in the health-care sector, but it's enough for Dendreon (NASDAQOTH: DNDNQ  ) to make our list this week. That's not too shabby for a company that my Foolish colleagues David Williamson and Brenton Flynn include as one of the worst of 2012.

Why did Dendreon move up this week? The bump appears to have been the result of a story on Dec. 5 about a new clinical trial involving Provenge, the company's prostate cancer drug. Georgia Health Sciences University kicked off enrollment for a new study that combines Provenge with two other drugs to evaluate the effects of the therapy on patients with prostate cancer.

My guess is that any bit of positive news was enough to drive shares up somewhat. Dendreon fell 77% from its highs in February and has only topped $5 per share a few times over the past four months. Unless a compelling catalyst comes along, I wouldn't be surprised to see the stock continue to fluctuate between $4 and $5 per share.

None of the above
To be honest, I don't really like any of our three stocks on the humongous list as long-term picks. My view of Dendreon lines up with my fellow Fools, David and Brenton: It's one of the worst biotech stocks of the year. I don't see it becoming one of the best. Hi-Tech Pharmacal is okay, but it's not a stock I would rush out to buy.

As for athenahealth, I like its business model and management team. However, the stock trades at a forward P/E multiple of over 58. Sales and earnings continue to grow at a strong clip, but not enough to justify that kind of valuation, in my opinion.

I typically think at least one of the stocks that make our list in this weekly series would be a reasonable choice for investors. This time, though, my selection is none of the above. Now if we only had that alternative with our politicians...

While you can certainly make huge gains in biotech and pharmaceuticals, the best investing approach is to choose great companies and stick with them for the long term. In our free report "3 Stocks That Will Help You Retire Rich," we name stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

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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 December 07, 2012, at 9:39 PM, lsr18 wrote:

    Although I am long and generally positive about hitk, it is unfair to attribute the 35% entirely to Super Storm Sandy. HITK’s management said that the storm caused a loss of about 1 to 2 million dollars in sales, which might translate to a few cents in profits, most of which will be recaptured in the next quarter. The real reason was the increased competition in the sales of flonase, hitk biggest product. Still, these numbers were nice.

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Related Tickers

10/21/2016 2:20 PM
ATHN $112.19 Down -7.27 -6.08%
athenahealth CAPS Rating: **
DNDNQ $0.00 Down +0.00 +0.00%
Dendreon Corp CAPS Rating: *
HITK.DL $0.00 Down +0.00 +0.00%
Hi-Tech Pharmacal CAPS Rating: *****