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 a pair of stocks that made some of the biggest upward moves over the past month, despite the incredible volatility in the market, which we then paired 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^
|Rare Element Resources (AMEX: REE )||135.0%||*|
|GTx (Nasdaq: GTXI )||91.2%||**|
Source: FinViz.com; ^From Dec. 30 to Jan. 31.
While you were out, the markets rebounded, but they may turn tail again if Europe's fragile financial system falls apart. So before we get shaken out again, let's see what the CAPS community thinks of these outperformers.
A mighty temblor
It must be some sort of annual phase rare-earth element stocks go through. It was just about a year ago that Rare Element Resources, Molycorp (NYSE: MCP ) , and Avalon Rare Metals (AMEX: AVL ) were soaring on the thought that China would be choking off the world's supply of the critical metals that are used in everything from smartphones to missile guidance systems.
The group sold off en masse after it became apparent the minerals weren't so rare after all and China didn't have a lock on their supply. Other countries might not be digging them out of the ground, but players like Molycorp were close to beginning production.
Rare Earth Resources got a boost last month when it said an interim resource estimate for its Bear Lodge project suggested it might find higher grades of ore than previously thought. It's been riding that report higher still, with shares more than doubling in the weeks since.
Yet China has reversed course on limiting exports of rare-earth elements and as soon as any miner starts production, it's going to add to the world's supply, bringing prices down further. The profits these companies (and their investors) are counting on might not materialize. That could be why two-thirds of the CAPS All-Stars rating Rare Element Resources don't think it's going to be a market beater. Tell us in the comments section below if you think it can still dig up profits, then add it to your watchlist to see how it turns out.
Investors put a lot of stock in analyst prognostications, so when the Wall Street mavens at Citigroup said biotech GTx is likely to report positive phase 3 clinical trial results for Ostarine, its therapy for improving outcomes of patients undergoing chemotherapy, the market sent shares soaring 35%.
Yet analysts are often wrong about outcomes and the probability of success when coming up against the FDA. Ask those who had bet with the analysts that pSivida and Alimera (Nasdaq: ALIM ) would successfully navigate the regulatory gantlet on their second attempt to get the diabetic macular edema drug Iluvien approved. Both stocks have yet to recover from the drubbing they took last November when the agency instead sent a complete response letter requiring two additional trials.
But if the analysts are right, GTx could have a huge hit on its hands. Ostarine treats the muscle-wasting effects of chemotherapy. As there's currently no treatment on the market to address that side effect, GTx would have the market to itself. Adding to its valuation model the potential revenues the drug would contribute, Citigroup raised its price target on GTX from $8 to $19 a stub.
The recovery from recent lows of 2.36 appears to rest on the shoulders of oral estrogen alpha receptor agonist Capesaris, now in phase II trials for prostate cancer. Nothing much has recently changed regarding those trials, and I think Capesaris is way too preliminary to justify a 300M enterprise value even with Ostarine thrown in.
Shake, rattle, and roll
These two stocks shook the market this past month, but the Fool has found one company that's digging up massive profits and is likely to continue to do so if the markets become rattled. Roll on over to get your free copy, but hurry, because it's available only for a limited time.