Some stocks are one-hit wonders, making a big splash when they first appear, then quickly fizzling into obscurity or oblivion. But for other stocks, that initial big move is only a preview for even bigger and better gains to come.
Today, we've listed three stocks that made some of the biggest upward moves over the past month, despite the incredible volatility in the market, which we'll pair with the ratings issued by our Motley Fool CAPS community. The higher each stock's rating, the greater CAPS members' faith in that company's ability to keep on beating the market.
1 Month % Change
CAPS Rating (out of 5)
|Inhibitex (Nasdaq: INHX )
|Medivation (Nasdaq: MDVN )
|Cheniere Energy (AMEX: LNG )
Source: FinViz.com; 1 Month % Change from Oct. 14 to Nov. 14.
While you were out, the markets collapsed, and may continue to do so as the impact of the U.S. credit downgrade filters through. So before we get shaken out again, let's see why the CAPS community thinks some of these companies might continue to outperform the market.
A mighty temblor
Successfully passing mid-stage trials is certainly a milestone worth celebrating, but investors still need to realize that marketability is still a few years off, even assuming the drug makes it through phase 3 clinical trials. In the meantime, however, Inhibitex investors are savoring the sweet taste of success realized by the positive mid-stage trials of its INX-189 hepatitis C therapy.
The global hepatitis market was valued around $5 billion in 2009 and could be worth as much as $15 billion by 2019. That's attracting pharmaceuticals to the arena, such as Roche, which bought out Anadys Pharmaceuticals (Nasdaq: ANDS ) for $230 million.
Along with Abbott Labs (NYSE: ABT ) and Pharmasset, Roche is pursuing development of an interferon-free hep C treatment. Abbott says its treatment could achieve $2 billion in annual sales if approved for sale in 2015.
The long road ahead of Inhibitex is probably why two-thirds of the CAPS All-Star members rating the biotech think it won't outperform the broad market averages. But tell us in the comments section below or on the Inhibitex CAPS page if you think there is still outsized potential to be realized, and then add the stock to your watchlist to keep track of how later trials fare.
The road less traveled
The much shorter path before it is why Medivation investors are so buoyant. Late-stage trials showed its prostate cancer drug candidate MDV3100, taken orally, helped patients live on average five months longer than a placebo while inducing relatively mild side effects. It's a heady feeling when your drug proves efficacious.
The real kicker was that the positive results and the potential for hitting the market sooner rather than later came just as Dendreon's prostate therapy suffered from declining expectations for growth, and cabozantinib, the prostate cancer drug from Exelixis (Nasdaq: EXEL ) , was going to have to take the same road as everyone else to market, rather than getting FDA permission to take a shortcut.
Now, while 72% of the CAPS members rating Medivation think it can exceed the returns of the broad indexes, its low one-star rating recognizes the fickleness of the FDA and suggests CAPS members think there are better places for your money. Add Medivation to your watchlist and let us know in the comments section below what you think its future marketing success will look like.
Like the biotechs above, Cheniere Energy has been waging an uphill battle for its Sabine Pass liquid natural gas export facility in Louisiana. Critics long contended it was a quixotic campaign to seek out international LNG exports, but earlier this year, the Energy Department approved Cheniere's export application, making it the first such company to get export approval in more than 40 years.
U.K.-based BG Group signed a 20-year deal to purchase 3.5 million tons of LNG annually, worth $8 billion, with exports beginning in 2015. While the plant will begin construction next year, the agreement helps it secure the necessary financing to get the job done.
But enthusiasm is going to be tempered somewhat (and shares are trading down 5% this morning) by the new construction cost estimates for the facility, which have ballooned by 39% since August. Back then, Cheniere said it would cost around $400 per ton of capacity to build; it updated that figure yesterday to say it will now cost as much as $555 per ton of capacity.
Standard & Poor's has doubts about Cheniere's finances, saying it's on the verge of default on payments due in May. But the company dismisses such notions, saying it will refinance its debt before then and that the BG deal alleviates much of the concern. Its subsidiary Cheniere Energy Partners (AMEX: CQP ) just hired Bechtel Group to begin construction.
CAPS member fud323 remains dubious about shareholders' ability to come through unscathed:
Poor fundamentals: Negative cashflow of $50m per quarter and negative equity; I'm essentially paying money to own their debt. Anticipated cashflow starts 2015 (if project runs on time) but until then, they'll be bleeding cash for 4 years straight. How are they even going to pay off their debts? I'm expecting huge stock dilution and accounting games.
Add the LNG specialist to the Fool's free portfolio tracker and tell us on the Cheniere Energy CAPS page if massive dilution is in the cards.
Shake, rattle, and roll
With these stocks shaking the market this past month, it pays to start your own research on them at Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page.