Why Vringo, EZCORP, and Organovo Holdings Are Today's 3 Best Stocks

The S&P 500 gets whacked after another FOMC economic stimulus cut, while Vringo, EZCORP, and Organovo Holdings all rise by double-digits.

Jan 29, 2014 at 5:15PM

The rough start to 2014 continued for the broad-based S&P 500 (SNPINDEX:^GSPC) today following more sanguine economic data, and an unfavorable decision from the Federal Open Market Committee, at least in the eyes of investors.

The biggest reason the market is moving precipitously lower today is the FOMC's decision to reduce its monthly economic stimulus by another $10 billion moving forward, to $65 billion. The Fed's bond-buying program, known as QE3, had allowed the Fed to purchase $85 billion in U.S. long-term Treasuries and mortgage-backed securities each month in an effort to keep lending rates low, and stabilize the housing market. This second straight month of a $10 billion drop in bond-buying activity does positively signal the FOMC's opinion that the U.S. economy is on the right track, but could also send interest rates higher with fewer bond purchases to hold them lower.

Along similar lines, the weekly figures from the Mortgage Brokers Association showed a 0.2% decline in mortgage loan originations. Consumers have proven to be incredibly sensitive to even the slightest uptick in mortgage lending rates, so today's FOMC action, coupled with a fractional decline in loan originations for last week, has investors clearly concerned.

By day's end the S&P 500 ended substantially lower by 18.30 points (-1.02%) to close at 1,774.20, its lowest close since mid-November.

Leading all companies to the upside today was intellectual property-rights owner Vringo (NASDAQ:VRNG), which advanced 20.7% after the company confirmed a ruling from the U.S. District Court for the Eastern District of Virginia that it's entitled to a post-judgment royalty rate of 6.5% from Google (NASDAQ:GOOGL), compared to a previous royalty rate of 3.5%, because of ongoing patent infringement by various Google programs, including AdWords. According to a report from The Wall Street Journal, the past and future awards would be worth close to $1 billion for Vringo, but an appeal of the ruling by Google is likely to take time, and is also likely to reduce the net award to Vringo. While this is a clear victory for Vringo, IP-rights companies often have very inconsistent cash flow making them hit-or-miss investments.

Pawn loan and non-recourse loan operator EZCORP (NASDAQ:EZPW) also rocketed higher on the day by 20.3% after it reported better-than-expected first-quarter results. For the quarter, EZCORP actually saw its revenue decline 1%, to $269.4 million, as net income fell to $22.6 million from $30.7 million in the year-ago period. However, EZCORP's adjusted profit of $0.49 per share handily topped Wall Street's estimate of $0.39 in EPS, and its revenue beat the consensus by $12 million. Most importantly, same-store sales for EZCORP jumped 8%, signaling that the pawn business is stronger than many investors had been forecasting. With lending rates forecast to rise moving forward, I would look for EZCORP's top line to slowly pick up the pace.

Finally, tissue-engineering specialist Organovo Holdings (NYSEMKT:ONVO) moved higher by 10.2% after it announced the delivery of its first 3-D liver tissue product to a key opinion leader, which is a fancy term for leading scientific researcher. This delivery is about three months ahead of schedule, and the hope from Organovo is that it'll allow researchers to spread excitement about its 3-D liver tissue product and help it improve the product for eventual commercial launch.

Speaking of its commercial launch, Organovo also announced it now expects its 3-D liver assay test to be launched prior to December. When all is said and done, it really comes down to whether or not Organovo's "cool" science can translate into marketable products. Getting a product to market ahead of schedule is a nice start, but an already frothy valuation without any revenue leads me to believe that Organovo's upside could be limited, at least during the next couple of quarters.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.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.

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