Why Geron, Restoration Hardware, and ImmunoGen Are Today's 3 Best Stocks

The S&P 500 suffers its worst loss in weeks following disappointing economic data, while Geron, Restoration Hardware, and ImmunoGen give investors a reason to smile.

Jun 12, 2014 at 5:15PM

Today, in contrast to the past couple of days, investors had an absolute smorgasbord of economic data dropped in their laps; and the initial reaction is that they were none too impressed, with the S&P 500 (SNPINDEX:^GSPC) suffering its worst single-day loss in weeks.


It appears as if retail sales turned out to be the biggest culprit, with May's sales rising 0.3%, handily missing the bar that economists had set for a 0.6% improvement. Following the conclusion of the polar vortex, retail sales surged, but the euphoria failed to carry over into May. Weaker retail sales may signal that the consumer is becoming cash-strapped, which would be bad sign for U.S. GDP growth prospects.

In addition to retail sales data, weekly initial jobless claims also jogged in the wrong direction, heading higher by slightly more than 1% to a seasonally adjusted 317,000. Although this figure is still historically low compared to where we've been in recent years, investors would prefer to never see jobless claims rise, as it could mean that finding a job is getting tougher for the unemployed.

By day's end, the S&P 500 had swooned 13.78 points (-0.71%), to close at 1,930.11, its lowest close in more than a week. Despite the overwhelming negativity, three individual stocks led investors to some hefty gains today.

Topping that list was clinical-stage biopharmaceutical company Geron (NASDAQ:GERN), which advanced 21.2% after announcing that the Food and Drug Administration had removed its partial clinical hold on the investigator-sponsored trial involving imetelstat as a treatment for myelofibrosis. The FDA had placed a partial hold on this study in March, following liver toxicity abnormalities; but after receiving additional data from the Mayo Clinic's lead investigator from its IST, the FDA is now allowing it to continue. I find the partial-hold lift unsurprising given that imetelstat did deliver impressive response results in its myelofibrosis IST, but I'd also caution that the full clinical holds on its multiple myeloma and polycythemia vera indications are still in place. With absolutely no depth to its pipeline, there's still far too much risk built up in Geron, even at its greatly reduced share price.

Following closely behind Geron is home-furnishings retailer Restoration Hardware (NYSE:RH), which surged 12.7% after it reported its first-quarter results and raised its full-year outlook.

Source: Max Touhey, Flickr.

For the quarter, net revenue jumped 22%, to $366.3 million, as comparable-brand sales skyrocketed 18%. Furthermore, adjusted EPS tripled to $0.18 from $0.06 in the year-ago period. By comparison, Wall Street was only expecting Restoration Hardware to net $0.11 per share in profit on $346.8 million in sales. Furthermore, Restoration Hardware now sees revenue of $1.86 billion-$1.89 billion, and EPS of $2.24-$2.30 for the full year, up from its prior EPS forecast of $2.14-$2.22. While great news for shareholders, I'm a bit concerned that, at a forward P/E of 30, Restoration's products are a bit too "faddish" to have long-term staying power. I would strongly suggest waiting for a significant pullback before even considering this as a viable investment opportunity.


Source: Umberto Salvagnin, Flickr.

Lastly, shares of biopharmaceutical company ImmunoGen (NASDAQ:IMGN) tacked on 8.8% after research firm UBS upgraded it from sell to neutral, and set a price target of $13 on shares, implying 7% upside based on yesterday's closing price. According to UBS' analysis, a more optimistic outlook on Kadcyla sales and royalty revenue should help buoy ImmunoGen's share price. While I often advise ignoring analyst actions as they are short-term price movers and rarely have any bearing on our investing thesis, this is an upgrade I'd agree with. ImmunoGen has a very deep clinical-stage pipeline complete with a handful of major partnerships. With multiple opportunities to hit a home run, I believe ImmunoGen has all the tools necessary to succeed over the long run.

These three stocks all surged today, but even they may stand little chance of keeping up with this top stock over the long term
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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.

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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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