Why NQ Mobile, Vanda Pharmaceuticals, and Protective Life Are Today's 3 Best Stocks

Despite poor economic data, the S&P 500 chalks up another record close, while NQ Mobile, Vanda Pharmaceuticals, and Protective Life surge by double-digit percentages.

Jun 4, 2014 at 5:15PM

Not even generally poor economic data can sink the broad-based S&P 500 (SNPINDEX:^GSPC), which reversed its fractional loss from yesterday to turn in yet another record-high close.


There was no bigger economic news today than the ADP National Employment Report, released before the opening bell, which showed that private businesses created just 179,000 jobs in May. That was below Wall Street's expectation that 210,000 private sector jobs would be created. The ADP numbers often give economists a better idea of what to expect for the subsequent Labor Department nonfarm payroll report, which is scheduled to be released on Friday. Based on today's data, we shouldn't expect the unemployment rate to dip any further from its present level of 6.3%.


Source: Bjorn Granberg, Flickr.

First-quarter worker productivity and unit labor cost figures from the Labor Deaprtment were also very concerning, especially for businesses. Worker productivity was revised from a prior dip of 1.7% to a decline of 3.2%, which was worse than expected. Inclement weather was the primary cause of this decline in activity, but a 5.7% increase in labor costs is far and away higher than anyone's wildest guess on Wall Street. Factory orders are moving higher again, so there's probably not an endemic problem here aside from the unpredictability of the weather, but it's still evident just how negatively the polar vortex affected the U.S. economy in the first quarter.

Even the Mortgage Bankers Association got in a jab on optimists today with its weekly loan originations reading dropping 3.1% from the previous week. Consumers continue to prove that they are hypersensitive to interest rate changes when they really shouldn't be considering that lending rates are near historic lows.

One bright spot came from the Institute for Supply Management services reading for May of 56.3, up from 55.2 in April. Similar to the first-quarter worker productivity numbers, a rebound here was expected as the weather around the country improved. If anything, this figure could provide a positive jolt for retailers that have taken it on the chin over the past couple months.

By day's end the S&P 500 had crawled out from the red and risen 3.64 points (0.19%) to close at 1,927.88, a fresh all-time high.

Leading all individual stocks to the upside today was mobile cloud security provider NQ Mobile (NYSE:NQ), which skyrocketed 30.9% after announcing the findings from its special committee that was investigating allegations of fraud from short-selling firm Muddy Waters. According to the findings, which included verification of all cash balances, interviews with company employees, and investigations into its acquisitions and business partners, there is no evidence of wrongdoing. In addition, the special committee made recommendations that NQ Mobile can implement to tighten up its accounting controls. Per my Foolish colleague Steve Symington, Muddy Waters has already refuted the findings of the special committee and still believes NQ Mobile to be a fraud. I'd argue that as long as NQ follows the recommendations of the special committee and remains transparent to investors following this investigation, there is no reason it can't head even higher over the long term.

Coming in a close second behind NQ Mobile was Vanda Pharmaceuticals (NASDAQ:VNDA), which gained 25.4% after the company announced that the European Medicines Agency (the EU's equivalent of our Food and Drug Administration) had accepted its application for marketing authorization for Hetlioz.

Source: StockMonkeys.com, Flickr.

Hetlioz is a non-24-hour sleep-wake disorder drug that was approved in the U.S. in January and helps blind people who have no light perception stay on a normal sleep schedule. Vanda estimates the EU could be home to roughly 130,000 people who could benefit from Hetlioz. Like any drug it'll need to be reviewed and approved in the EU before it can reach pharmacy shelves, but the potential to double its annual peak sales potential obviously has investors excited. However, I also watched Vanda mismanage its first FDA-approved therapy (Fanapt), which makes me want to stick to the sidelines and wait for Hetlioz's sales to do the talking rather than speculate on how good it could be.


Source: Kayugee, Flickr.

Lastly, life insurance and financial product and service provider Protective Life (NYSE:PL), which has been the subject of buyout rumors all week, surged 18.1% after Dai-ichi Life Insurance officially agreed to purchase the company for $5.7 billion. According to Dai-ichi, its purchase of Protective Life will allow it to become a global insurer, especially considering that no country underwrites more life insurance policies than the United States. The deal is still subject to the approval of Protective Life shareholders, with a vote likely coming in the next two or three months. If approved, the buyout would be completed by the late fourth quarter or early 2015. It's hard to see Protective Life shareholders not approving this deal, with Dai-ichi paying eight times trailing EBITDA and 13 times forward earnings for Protective Life. All told, it looks like a solid long-term win for both companies.

These 3 stocks may have soared today, but none are likely going to be able to keep pace with this top stock over the long haul
Give us five minutes and we'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% over 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.

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 has no position in any of the stocks mentioned. 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." 

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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information