Why Chelsea Therapeutics, Keurig Green Mountain, and SolarCity Are Today's 3 Best Stocks

High-profile earnings disappointments drag down the S&P 500 despite big gains from Chelsea Therapeutics, SolarCity, and Keurig Green Mountain.

May 8, 2014 at 5:15PM

In spite of generally positive economic data, and spending much of the day in positive territory, the broad-based S&P 500 (SNPINDEX:^GSPC) finished the day modestly lower, dragged down by a combination of profit-taking, as well as number of high-profile earnings disappointments.


The big news of the day on the economic front was the release of better-than-expected weekly initial jobless claims data. For the week, jobless claims dipped 7.5% to a seasonally adjusted 319,000. It also ended what had been a two-week surge in weekly jobless claims. Although week-to-week fluctuations should be taken with a grain of salt and not overreacted to, any figure below a seasonally adjusted 350,000 represents, in my opinion, steady improvement in the jobs market that could push the unemployment rate eventually down toward 6%.

Tesla Model S Driveway

Source: Tesla Motors.

Working against the S&P 500, though, were a number of high-profile earnings disappointments, perhaps none bigger than Tesla Motors (NASDAQ:TSLA). Although Tesla topped Wall Street's adjusted EPS estimates of $0.10 per share in profit by $0.02, its guidance and continuing GAAP losses left a lot to be desired. As a Tesla short-seller, it's good to see a bit of reality creeping back into Tesla's valuation; but it also acts as a deflator for the overall market.

By day's end, the S&P 500 had dipped 2.58 points (0.14%), to close at 1,875.63. Despite the move lower, there were plenty of companies bucking the trend and surging to the upside.

None had a bigger move higher than small-cap biotech Cheslea Therapeutics (NASDAQ:CHTP), which jumped 31.6% after agreeing to be purchased by Danish pharmaceutical company H. Lundbeck. Under the terms of the deal, H. Lundbeck will pay $6.44 in cash to Chelsea's shareholders to get its hands on the company's low-blood-pressure drug Northera, which is used to reduce dizziness in patients with Parkinson's disease. In addition, Lundbeck will pay up to $1.50 per share in contingent value rights based on Northera's sales performance between 2015 and 2017. It seems like a pretty fair shake for both parties involved considering that Chelsea doesn't have experience marketing drugs, and really didn't appear to want to deal with the full marketing costs involved with ramping up sales. In turn, Lundbeck protects itself with the CVRs, just in case Northera fails to reach its peak sales potential of roughly $400 million.

Specialty coffee roaster Keurig Green Mountain (NASDAQ:GMCR) crushed short-sellers' hopes and dreams, once again, by gaining 13% on the day following better-than-expected second-quarter earnings.

Source: Keurig Green Mountain.

For the quarter, Keurig Green Mountain reported a 10% rise in revenue, to $1.1 billion, as net income grew 22%, to $1.08 per share (adjusted). Compared to Wall Street's estimate of $0.95 in EPS on $1.05 billion in sales, Green Mountain again triumphed. Keurig Green Mountain also announced the expansion of an agreement with J.M. Smucker allowing its products to be available for its single-brew system. If there was one bit of mixed news, it was that Keurig Green Mountain reduced its full-year EPS to a fresh range of $3.63-$3.73, down from prior guidance of $3.75-$3.85. The good news is that this new range is in line with the Street's estimates. Based on its numerous partnerships and niche market position, I continue to see plenty of upside opportunity to Keurig Green Mountain shares.


Source: U.S. Dept. of Agriculture, Flickr.

Lastly, Tesla Motors may be putting a damper on CEO Elon Musk's day, but the outperformance of solar panel retailer and leasing company SolarCity (NASDAQ:SCTY) likely brought a smile to his face as the co-founder. Shares of SolarCity brightened up, rising 12.4% after it reported first-quarter earnings after the closing bell last night.

For the quarter, SolarCity added 17,664 customers and booked 136 MW of electric-generating capacity. More importantly, with its launch into Nevada, it increased its guidance to 500 MW to 550 MW deployed from its prior estimate of 475 MW to 525 MW for the year. It also established 2015 guidance of 900 MW to 1,000 MW deployed. While this is great news, and it continues to be an attractive play on paper, its adjusted loss of $0.82 per share was wider than Wall Street expected. Until SolarCity can drastically put a dent in those quarterly losses, it might be wise to keep your expectations of the company tempered.

Warren Buffett just bought nearly 9 million shares of this company; could it be next to find its way into the day's top performers?
Imagine a company that rents a very specific and valuable piece of machinery for $41,000... per hour. (That's almost as much as the average American makes in a year!) And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report details this company that already has over 50% market share. Just click HERE to discover more about this industry-leading stock for free... and join Buffett in his quest for a veritable landslide of profits!

Sean Williams is short shares of Tesla Motors, but has no material interest in any other 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 SolarCity and Tesla Motors. It also recommends Keurig Green Mountain. 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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers