Why Merrimack Pharmaceuticals, Weight Watchers, and Pacific Biosciences of California Are Today's 3 Best Stocks

For a second consecutive day, investors were overwhelmed with economic data and earnings, causing much confusion and very little change in the broad-based S&P 500 (SNPINDEX: ^GSPC  ) .

Weighing the index down today was the weekly release of jobless claims figures, which pointed to an increase of 14,000 from the prior week to a seasonally adjusted 344,000. While still low relative to the past couple of years, this marks the second week in a row that jobless claims have had a sizable increase, and it could point to slowing improvement in the jobs market.

On the other hand, both the ISM Index for April and personal spending figures from March gave optimists a reason to latch onto this rally.

The ISM Index in April rose to a reading of 54.9 from a reading of 53.7 in March. The good news here is that manufacturing activity appears to be expanding faster than economists' predicted, which would bode well for U.S. GDP.

Similarly, personal spending rose a robust 0.9% in March on the heels of improved weather across the country. This was a sizable jump from the 0.5% personal spending jump witnessed in February. Consumer spending is a critical component of success to U.S. GDP, so investors should be satisfied to see this figure moving higher.

By day's end, the overwhelming amount of data caused the S&P 500 to fall fractionally by 0.27 points (-0.01%) to close at 1,883.68. Despite the drop, three stocks bucked the trend to the upside in a big way.

Topping the charts today was small-cap biopharmaceutical Merrimack Pharmaceuticals (NASDAQ: MACK  ) , which rocketed higher by 59.2% after the company reported that its pancreatic cancer therapy MM-398, in combination with 5-flouoroacil and leucovorin, had met its primary endpoint of improving overall survival in a phase 3 study. The MM-398 combo, which is given to patients following treatment with Gemzar, improved overall survival by 1.9 months to 6.1 months, reduced the risk of death by 33%, and demonstrated a significant advantage in progression-free survival. Merrimack is now planning to file for a new drug application sometime this year. While great news for shareholders, I'd still suggest remaining cautious because trial data is only half the battle when bringing a new drug to market. With unsuccessful launches doing in a number of cancer-focused companies, I'd likely stick to the sidelines until we have a better read on the FDA's views of MM-398 and, if approved, wait until it has a few quarters of sales under its belt.

Source: Slgckgc, Flickr.

Helping pack on the pounds of profits today was Weight Watchers International (NYSE: WTW  ) , which jumped 19.8% on the heels of a sizable first-quarter earnings beat. For the quarter, Weight Watchers reported a revenue decline of nearly 17%, to $409.4 million, as total paid weeks dipped 14%, and adjusted net income tumbled 64%. Despite the declines, Weight Watchers topped the Street's revenue expectations by $10.2 million, and its adjusted EPS of $0.31 crushed the consensus estimate of $0.09. Furthermore, it beefed up its full-year EPS forecast to a range of $1.45-$1.70 relative to the current consensus of $1.40. Although this news is positive, and shareholders have a reason to be excited today, I'd remind investors that results that are simply not as bad as expected still aren't good. With revenue declining, and customer loyalty practically nonexistent, Weight Watchers is a company I consider to be easily avoidable from an investing perspective.

Finally, genetic analysis diagnostic systems maker Pacific Biosciences of California (NASDAQ: PACB  ) advanced 17% after announcing its first-quarter results.

PacBio RS II, Source: Pacific Biosciences of California.

During its quarter, Pacific Biosciences saw revenue more than double, to $11.6 million from $5.6 million in the year-ago quarter, as it sold nine total PacBio RS II systems compared to three in the prior year, while also recognizing $1.7 million in collaborative diagnostic revenue from Roche. Although its EPS loss of $0.28 was actually $0.01 wider than expected, its revenue topped the consensus of $10.1 million handily. The thought by investors here is that this could be a turning point for PacBio's gene sequencing systems, which have delivered erratic sales for multiple quarters. I certainly find today's results and big increase in PacBio sales encouraging, but would also suggest that profits could be years away. As such, while PacBio holds a unique niche in a growing sector, I'd pass on it until we see a marked decrease in its quarterly losses.

Merrimack, Weight Watchers, and PacBio all soared today, but they may be no match to keep up with this top stock over the long run
Give me five minutes, and I'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks one stock with outstanding potential. But it's not just any run-of-the-mill company; it's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year, his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252%, and 1,303% during the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

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.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2940025, ~/Articles/ArticleHandler.aspx, 8/27/2015 3:41:20 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Sean Williams

A Fool since 2010, and a graduate from UC San Diego with a B.A. in Economics, Sean specializes in the healthcare sector and in investment planning topics. You'll usually find him writing about Obamacare, marijuana, developing drugs, diagnostics, and medical devices, Social Security, taxes, or any number of other macroeconomic issues.

Today's Market

updated Moments ago Sponsored by:
DOW 16,410.74 125.23 0.77%
S&P 500 1,967.42 26.91 1.39%
NASD 4,745.62 48.08 1.02%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/27/2015 3:30 PM
^GSPC $1967.42 Up +26.91 +1.39%
S&P 500 INDEX CAPS Rating: No stars
MACK $10.25 Up +0.16 +1.59%
Merrimack Pharmace… CAPS Rating: ***
PACB $4.86 Up +0.28 +6.11%
Pacific Bioscience… CAPS Rating: **
WTW $5.77 Down -0.03 -0.52%
Weight Watchers In… CAPS Rating: **