Why TESARO, Kandi Technologies, and Pinnacle Foods Are Today's 3 Best Stocks

Investors' appetite for risk pushed the S&P 500 to a new record close, while TESARO, Kandi Technologies, and Pinnacle Foods all surged higher by double-digit percentages.

May 12, 2014 at 5:15PM

Important economic data was again as scarce as it could be on a Monday, but that didn't seem to matter much to the broad-based S&P 500 (SNPINDEX:^GSPC), which surged to a record close.


The culprit behind today's decisive move higher was another weekend filled with merger and acquisition rumors and deals -- one of which we'll get into below -- as well as investors finally willing to step up and purchase downtrodden tech and biotech names, which have been bludgeoned over the past couple of weeks. Investor concern over riskier investments -- e.g., small caps, money-losing or marginally profitable high-growth tech stocks, and clinical-stage biotechs -- has been building, and today's action appears to indicate that at least for one day, the risk-on trade was back in full force.

By day's end, the S&P 500 closed at a fresh all-time high, up 18 points (0.97%) to 1,896.65.

Pushing the envelope and leading all companies higher for the day was clinical-stage biotech company TESARO (NASDAQ:TSRO), which advanced 21% after lead drug rolapitant achieved its primary and secondary endpoints in the final of three phase 3 trials for chemotherapy-induced nausea and vomiting, or CINV. According to the press release, rolapitant "achieved statistical significance over the control arm for the primary endpoint of complete response in the delayed phase of CINV," and also "achieved statistical significance over the control arm for the key secondary endpoints of [complete response] in the acute (0 to 24 hour) and overall (0 to 120 hour) phases of CINV, for the secondary endpoint of no significant nausea, and for all other secondary endpoints."

All told, the data appears encouraging and would suggest a better than 50-50 shot at approval at this point. Tesaro is planning to file its new drug application with the Food and Drug Administration by mid-2014, which would likely put it on course for a PDUFA date somewhere around March-April 2015. It's a stock biotech-savvy investors should continue to monitor closely.


Source: Paul Krueger, Flickr.

Not too far behind TESARO was Kandi Technologies (NASDAQ:KNDI), a developer of all-terrain vehicles, go-karts, electric vehicles and components, which spiked 15.9% higher after the company produced better-than-expected first-quarter results earlier this morning. For the quarter, Kandi's revenue exploded higher by 174% to $40.2 million, with the bulk of the gains being from its EV battery pack business, which produced $25 million in revenue in its first quarter of operations. EV products also jumped 385% to $8.4 million from $1.7 million in the year-ago period. Adjusted income for the quarter rose 30% to $1.6 million, or about $0.04 per share, from $1.3 million in the prior year period.

While I'm encouraged by Kandi Technologies' rapid EV products growth, I'd also caution that the company is still only marginally profitable, and enough headwinds and competition exists in this space that investors should realize this stock isn't without its own unique risks. As for me, I'm still perching myself safely on the sidelines.

Duncan Hines

Source: Pinnacle Foods.

Finally, we have the aforementioned "merger Monday" whereby Hillshire Brands (NYSE:HSH) agreed to acquire Pinnacle Foods (NYSE:PF) for what equates to $6.6 billion inclusive of Pinnacle's net debt. The implied purchase price at the time of the transaction was $36.02, and was to be comprised of $18 in cash and 0.50 shares of Hillshire common stock. The purchase price represents an 18.3% premium over Friday's close for Pinnacle, and helped send the stock higher by 13.2% on the day.

The merger will combine Hillshire's dominance in the meat section with Pinnacle Foods' broad array of vegetables, giving both companies more exposure to the frozen and refrigerated section of most major grocery chains. The transaction is expected to be immediately accretive to earnings, and by year three the combined company could save up to $140 million in synergies and achieve EPS accretion in excess of 15%. It's certainly hard to argue against those figures, but I personally can't help but feel Hillshire overpaid for Pinnacle, whose growth is likely going to slow into the low single-digits and is being valued at close to 19 times forward earnings.

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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.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

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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