Why XOMA, Zillow, and Novavax Are Today's 3 Best Stocks

Strong earnings reports help push the S&P 500 higher for the ninth time in 11 sessions, as XOMA, Zillow, and Novavax lead all stocks to the upside.

Apr 29, 2014 at 5:15PM

High hopes for earning season continued to fuel the S&P 500 (SNPINDEX:^GSPC) upward on Tuesday, with the broad-based index advancing for the ninth time in the past 11 sessions. Economic data, on the other hand, was good, but not great.


First up, The Conference Board noted a dip in consumer confidence from a reading of 83.9 in March to 82.3 for April. All things considered, the latest reading still signals a fairly high level of financial optimism for consumers in the short and long term, although some investors may have hoped for more.

In addition, the Case-Shiller 20-city index showed a 12.9% year-over-year increase in home prices for February. This was more or less in line with economists' expectations, but down from the 13.2% year-over-year increase witnessed in January. As with the consumer confidence figures, this was a month-over-month decline, but a nearly 13% increase in home prices is fantastic, and it speaks to tight inventory controls by homebuilders.

By day's end the S&P 500 had digested the mixed but generally positive economic data and climbed 8.9 points (0.48%) to close at 1,878.33.

Topping the charts and leading to the upside was small-cap biopharmaceutical company XOMA (NASDAQ:XOMA), which jumped 20.2% after receiving an upgrade to buy from hold by research firm MLV. The upgrade was based on XOMA's valuation, as well as the expectation of positive results from its P3 EYEGUARD-B trial involving gevokizumab for Behcet's uveitis. As always, I would suggest investors largely ignore these analyst moves, which are short-term price drivers and rarely alter our investing thesis. As I noted earlier today, the same firm downgraded XOMA just weeks ago after noting numerous pipeline disappointments. While I personally believe XOMA has a lot of potential with gevokizumab, I'd also suggest waiting for more concrete results before diving in.

Online and mobile-based real estate information marketplace Zillow (NASDAQ:ZG) surged 14.1% on the day, though not because home prices were up by double-digits in America's largest cities year over year. Rather, hedge fund Tiger Global reported in its 13G filing a 9.5% passive stake in Zillow.

Zillow Mobile
Source: Zillow.

This new and substantial position suggests to investors that Zillow might have unlocked value that Tiger Global may want to exploit. While certainly a positive for investors, Zillow is still only marginally profitable and trading for a whopping 153 times forward earnings as of this writing. In other words, it'd be a tough sell, at least for me, to argue that the company has additional upside following today's move.

Lastlt, and returning to the biopharmaceutical sector, Novavax (NASDAQ:NVAX) gained 14% after reporting positive top-line data from a midstage trial involving its respiratory syncytial virus vaccine. According to its press release, Novavax's RSV-F protein nanoparticle vaccine was demonstrated to be both safe and tolerable in trials, consistent with its previous phase 1 results, and delivered significant increase in RSV-F antibody levels across all dosages and formulations. As with XOMA, there's a lot of potential for Novavax's pipeline, but it's still very early in development. Until we get into later-stage trials and can focus more on the efficacy of its vaccines, investors might want to tone their optimism down a bit.

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Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of, and recommends Zillow. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

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." 

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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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