Why Aerie Pharmaceuticals, Sinclair Broadcast Group, and Nexstar Broadcasting Are Today's 3 Best Stocks

The S&P 500 bucks a trio of awful economic data releases, while Aerie Pharmaceuticals, Sinclair Broadcast Group, and Nexstar Broadcasting soar by double-digit percentages.

Jun 25, 2014 at 5:15PM

Just like that, the S&P 500's (SNPINDEX:^GSPC) worst loss in nearly two weeks was wiped out with a modest gain that wound up retracing more than half of Tuesday's loss.


The interesting aspect of Wednesday's gain is that it followed a significant worsening in economic data which normally would have implied downside pressure.

No report stood out as more of a sore thumb than the final estimate for U.S. GDP in the first quarter. Revised down from an initial gain of 0.1% to a contraction of 1% in the second estimate, the final GDP reading for the quarter came in at a decline of 2.9%, which was significantly worse than Wall Street's forecast of a 1.8% decline. This looks to be almost entirely the result of colder weather affecting spending and manufacturing, but it's a swift kick in the pants for optimists who are looking for strong signs of economic growth as QE3 is slowly wound down.

Durable goods orders for May also disappointed, with a 1% drop in May compared to a revised-down expansion of 0.6% in April. Excluding extremely costly transportation items, core durable goods still declined by 0.1% -- a cause for concern that consumers' appetite for larger and more expensive goods may be waning.

Finally, the weekly release of the Mortgage Bankers Association's Mortgage Index showed a decline of 1% from the previous week. This follows a 9.2% tumble in the prior week. While fluctuations in loan originations (i.e., mortgages and refinancing) are normal, witnessing a drop in mortgage servicing needs with lending rates nearing their lowest levels in a year is a potentially worrisome sign for the housing sector.

Despite this trio of concerns, the S&P 500 still managed to jump by 9.55 points (0.49%) to close at 1,959.53.

Topping the charts of all individual stocks Wednesday was clinical-stage biopharmaceutical company Aerie Pharmaceuticals (NASDAQ:AERI), which skyrocketed 28.3% after it announced positive phase 2b data for investigational glaucoma therapy roclatan. Roclatan hit all of its clinical endpoints in the study, showing a 34% reduction in mean diurnal intraocular pressure compared to the baseline measurement at day 29 (it was a four-week treatment). Furthermore, roclatan was compared to latanoprost (the generic name for Xalatan), the most commonly prescribed glaucoma medication, and it outperformed latanoprost from an efficacy standpoint at each step along the way. Aerie plans to begin phase 3 trials involving roclatan soon, and may look to license the drug outside the U.S.

Source: Convergencia Democratica de Catalunya, Flickr.

As I noted earlier on Wednesday, the simple fact that it's outperforming latanoprost with predominantly mild adverse events is an extremely positive sign. It could mean that roclatan has future blockbuster potential, as Xalatan was a billion-dollar drug. But investors would be wise to understand that a new drug application isn't likely to occur before mid-2016, and an approval could come another six-to-10 months later. In other words, catalysts could be few and far between, which makes chasing Aerie's run fairly risky, in my opinion.

The remaining top stocks on Wednesday both came from the broadcasting sector, with Sinclair Broadcast Group (NASDAQ:SBGI) and Nexstar Broadcasting Group (NASDAQ:NXST) advancing by 15.6% and 13.5%, respectively.

The big surge came on the heels of a ruling by the Supreme Court that Aereo, an Internet TV provider, was operating illegally. Aereo had been picking up over-the-air TV signals and selling broadcasting content to Internet users for $8 per month. However, Aereo wasn't paying any licensing fees to broadcasting companies, which resulted in a handful of lawsuits that worked its way to the Supreme Court.

Sinclair Broadcast Group investor presentation, Source: Sinclair Broadcast.

Wednesday's ruling would invalidate the business model of Internet-TV upstarts harnessing over-the-air TV signals and repackaging them into sellable content unless they strike licensing deals with networks beforehand. For Sinclair and Nexstar, it means their content remains protected, yet it also gives them the flexibility to negotiate deals with Internet-TV start-ups like Aereo to expand their audience reach and increase revenue through licensing fees. In all, this is a solid win for traditional broadcasting companies, and Wednesday's spike higher appears well deserved.

These 3 stocks soared, but they could struggle to keep pace with this Warren Buffett darling stock over the long run!
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, and join Buffett in his quest for a veritable landslide of profits!

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 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.

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

Compare Brokers