There are one-hit wonders, and then there are those stocks that the initial big move is only a preview for even bigger and better gains to come.
Today, we list a pair of stocks that despite the incredible volatility in the market made some of the biggest moves higher over the past month, which we'll pair with the ratings issued by our Motley Fool CAPS community to gauge their sentiment of their future. The higher each stock's rating, the greater CAPS members' faith in that company's ability to keep on beating the market.
(out of 5)
|Mitek (Nasdaq: MITK )
|Arena Pharmaceuticals (Nasdaq: ARNA )
A mighty temblor
Using a smartphone to make deposits is a relatively new phenomenon, but remote deposit capture (RDC) has been fairly widespread since the passage of Check 21 in 2004. The usage of scanning devices to make deposits has been broadly accepted by large commercial interests and if they're able to make money off of it that might be the impetus to push more banks to adopt the technology. Yet it could push customers away from using it, too, though so far that's not happening.
US Bancorp (NYSE: USB ) began charging $0.50 per deposit made via RDC, which beforehand had largely been viewed as a value-added service for banking customers. They argue that customers have accepted the fee, which proves others can do so with alienating depositors.
Mitek is one of the leading firms offering RDC technology to banks, and counts among its client list JPMorgan Chase and Capital One Financial. US Bancorp is another Mitek customer, through Fiserv (Nasdaq: FISV ) . The RDC specialist recently reported it achieved $10 billion in deposits and growth in such deposits jumped 143% in the six-month period ending Dec. 31.
Despite the technology's proliferation and Mitek's own dominance of the field through patents, shares of Mitek are off almost 40% over the past year and sit some 70% below their 52-week highs even after the 82% jump this past month.
The downfall began after USAA, a financial services firm for the military and their families, filed a patent infringement lawsuit claiming Mitek misappropriated RDC technology it was developing independently to use as its own. Naturally Mitek denies the claims and says USAA violated its own patents. A second round of weakening support occurred after second-quarter results sliced revenues 58% as fewer customers signed up for the service.
Despite the drubbing, I continue to believe Mitek will eventually win the day and will maintain my outperform rating on CAPS. As CAPS member Dow18k says, the proliferation of smartphones will drive banks to offer the service to depositors and as the industry leader its diversifying its capabilities into other fields: "Research reveals that Mitek is not a one trick pony as they have offerings suitable for the Insurance, Medical and Transportation industries ready to go."
Tell us in the comments section below or on the Mitek CAPS page if you think RDC technology will soon become as ubiquitous as smartphones themselves, then add the tech specialist to the Fool's free and personalized stock-tracking service to stay on top of industry developments.
Running out the clock
The countdown to an FDA decision on fat-loss therapy locaserin is in full swing, and while Arena Pharmaceuticals investors initially used that anticipation to run the stock higher, they might be getting cold feet now that the deadline is almost upon us. The stock quadrupled over the past three months, but tumbled 15% Friday. The regulatory agency is expected to reach a consensus by Wednesday, but with so much build-up, I'm expecting the stock to fall no matter which way the decision goes.
I expect the FDA to ignore (as it occasionally does) the advice of its advisory panel, which ruled 18-4 in favor of approval. Although it doesn't usually happen on decision day, my hunch is the FDA will punt as it did with VIVUS (Nasdaq: VVUS ) and push an actual decision back a few months to have more time to review it. (The advisory panel had voted 20-2 in favor of rival fat-loss drug Qnexa.) So I believe this will be a "buy the rumor, sell the news situation," though I'm not sure it will even get the stamp of approval down the road.
CAPS member madman27 begs to differ, saying locaserin is safer than Qnexa and the company itself is ready to hit the ground running: "With manufacturing facilities ready to go (in Switzerland) and a strong partner already signed up, we seem to be geared up to witness a blockbuster stock."
Everyone seems to have an opinion on Arena's potential, so let me know in the comments box below or on the Arena Pharmaceuticals CAPS page which way you think the decision will go, then add it to the Fool's free portfolio tracker to keep up to date.
Shake, rattle, and roll
These two stocks shook the market this past month, but it's not just drugmakers that are setting the world on fire. Fool analysts think they've found a different kind of health-care company with plenty of upside. You can read about it in their new free report, "Discover the Next Rule-Breaking Multibagger." Get your copy for free.