Stocks Shaking the Investment World

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.

Stock

1-Month  Change

CAPS Rating
(out of 5)

Mitek (Nasdaq: MITK  ) 81.8% **
Arena Pharmaceuticals (Nasdaq: ARNA  ) 62.8% **

Source: FinViz.com. 

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.

Fool contributor Rich Duprey holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of JPMorgan Chase. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (4) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 25, 2012, at 4:03 PM, helpmesav wrote:

    You will be wrong about Arena - Lorcaserin does not have the side effects that Qnexa has. FDA will not go against the vote - I'll catch up with you on Wednesday Rich.

  • Report this Comment On June 25, 2012, at 5:13 PM, feelinIrie wrote:

    Let me see if I have this correct:

    1)So I believe this will be a "buy the rumor, sell the news situation,"

    Where were you, CNBC and Cramer during this run, and everyone else saying this when it was at $11.00 and above?

    2) though I'm not sure it will even get the stamp of approval down the road

    Really? If ARNA doesn't there is no way VVUS does either.

    I really would like to believe you are just have no clue of the billion dollar business that ARNA will be apart of, but after reading your "reasonings" I believe that all these articles are part of the system that trys to controls the "big picture".

  • Report this Comment On June 25, 2012, at 5:42 PM, clawmann wrote:

    The reason that VVUS got "punted" is because they submitted a REMS doc 13 days before there original PDUFA.

    The FDA doesn't punt just to punt. In fact they get dinged on their GAO report card if they miss a PDUFA (unless the drug sponsor gives them reason, like VVUS did). The timelines are set by statute. The FDA has an internal goal of hitting 90% of its PDUFA dates.

    I don't see the FDA punting the the lorc decision.

  • Report this Comment On June 25, 2012, at 6:38 PM, clawmann wrote:

    VVUS got a delay because they submitted a REMS 13 days before their original PDUFA. The FDA pushed the date back to give themselves time to review it.

    ARNA has not submitted a REMS, and - if the CEO is to be believed (I think he is) - three weeks ago he told an investor conference that he was optimistic that there would be no delay nor REMS requirement. And there is no evidence whatsoever that his optimism is unfounded. And the fact that there has been no delay announcement - and here we are 48 hours before COB on the PDUFA date - would actually seem to indicate - at the very least - that there won't be a delay.

    This simple-minded "VVUS got a delay so ARNA should get one too" betrays a complete lack of understanding of the FDA as well as the PDUFA law (which establishes the time-lines the FDA must adhere to).

    Did you know that the FDA has an internal goal of meeting 90%+ of their PDUFA dates?

    Did you know that the FDA gets dinged on their GAO scorecard (that goes to Congress) if they miss one?

    Did you know that the above is why the FDA likes it when a company like VVUS (or Gilead earlier this month) gives them an acceptable reason to reschedule a PDUFA date? They don't get dinged if they can blame the delay on the company.

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