Whoa! These 3 Stocks Rode the Dow Higher

The Dow Jones Industrial Average had its first triple-digit gain day since the beginning of the year as a new jobs report showed the economy adding more private sector jobs even as government employment declined. Yet the unemployment rate headed back up again, hitting 7.9% although it benefited by a shrinking labor force participation rate. With almost 90 million Americans no longer included in the unemployment equation it's hard to see this as a net benefit.

But investors chose to see the silver lining instead, pushing the Dow up 147 points and over the psychologically significant 14,000-point threshold. The three stocks below, however, did even better than the index, so let's see why investors were particularly enthused about these companies that they would boost their shares by double-digit percentage gains.

Company

% Gain

Audience (NASDAQ: ADNC  )

15.4%

Peregrine Pharmaceuticals (NASDAQ: PPHM  )

12.8%

Universal Display (NASDAQ: OLED  )

10.2%

Now resist the urge to high-five everyone in the cubicles next to you. Smart investors won't celebrate until they know why their stock surged, because without a fundamental basis for the bounce, these stocks could just as quickly make the return trip down.

Who's laughing now?
Certainly audio-processing specialist Audience isn't getting the last laugh, but it had to feel a bit smug after reporting pretty big quarterly results despite getting dumped from the iPhone 5 last fall by Apple (NASDAQ: AAPL  ) . Its technology is still found in the two earlier iterations of the smartphone and Apple continued selling a whole bunch of them this past quarter even as it sold 48 million units of the current version. Audience ended up generating a third of its revenue from the iPhone 4 and 4S, which helped spur the better results.

Equally important though was its better-than-expected guidance, which analysts believe is based on the audio-processing technology being included in Samsung's top Galaxy S4  =handset that will launch in April. If true, Audience could be laughing all the way to the bank.

Ready to take flight
Still trying to recover from the mishandling of data by a third-party contractor it hired to distribute its investigational drug to patients during clinical trials, Peregrine Pharmaceuticals took flight on Friday after an analyst suggested a partnership deal could manifest itself now that the biotech thinks it can salvage the test results.

Cancer drug bavituximab is being tested on patients who don't respond to initial cancer treatments. The study last year compared the results of patients receiving bavituximab and chemotherapy with a control group that got a placebo and chemotherapy. To keep Peregrine researchers blind, they hired a contractor to distribute the drug, and the results showed those taking bavituximab had a median overall survival rate twice that of those on chemo. That is, until Peregrine discovered possible coding problems by the contractor, making it unsure which patients got which therapy. Coming as it did just as the biotech was to meet with regulators Peregrine's stock plummeted, losing 85% of its value.

Last month, however, Peregrine said that after an in-depth review they're confident they'll still be able to move into phase 3 testing and will reschedule the meeting with the FDA to discuss the mid-stage results. The stock got a nice bounce from that news, though it hasn't soared anywhere near the lofty levels it held prior to the snafu. But at least one analyst is encouraged by the developments and says it's possible we'll see a pairing soon.

There's still a lot of risk involved with taking a stake on Peregrine now since you have to trust management's assessment of the situation and whether the FDA will buy into its analysis. Let me know in the comments box below which way you think the regulatory agency will go.

Say no more
Are a bunch of investors sitting around shooting the breeze and talking positively about your company enough to justify a 10% jump in your shares? It is if you're Universal Display and the investors are the Value Investing Conference at Columbia University, featuring luminaries like Seth Klarman and Bruce Berkowitz.

Despite a seemingly sky-high valuation, the conferees heard that the OLED screen maker could capitalize on its coin-drop business model by extracting royalties from smartphone makers for every device they sell. Because OLED technology is still a growing market it suggests the stock is actually undervalued at current levels.

The markets haven't agreed with that assessment thus far, at least up till Friday, particularly after Universal reported substantially lower product sales and royalties last November. The royalties issue anyway is likely due to timing issues with Samsung and one can easily surmise they'll recover in the current quarter since its licensing agreement with the handset maker runs through 2017 and Samsung is required to make semiannual payments to Universal Display .

Whether that constitutes a value investors dream opportunity is another matter, but you can give us your views below on whether it will continue collecting tolls on the mobile computing superhighway.

Whoa, Nelly!
There's no doubt that Apple is at the center of technology's largest revolution ever, and that longtime shareholders have been handsomely rewarded with over 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and more importantly, your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

 


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  • Report this Comment On February 05, 2013, at 2:51 PM, BSDetector wrote:

    You will see Peregrine take flight in much the same manner that CBMX did recently ($1.97 to $10+) BUT with no pullback in sight. This should happen within weeks not months (sorry I couldn't resist). For the record I sold all of my ARNA shares for this stock in November. That should give you an idea of how confident I am of this company because ARNA is a clear winner in the near future.

    Owner since 0.80

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