3 Stocks to Get on Your Watchlisthttp://www.fool.com/investing/general/2013/02/27/3-stocks-to-get-on-your-watchlist-23.aspx Sean Williams
February 27, 2013
I follow quite a lot of companies, so the usefulness of a watchlist to me cannot be overstated. Without my watchlist, I'd be unable to keep up on my favorite sectors and see what's really moving the market. Even worse, I'd be lost when the time came to choose which stock I'm buying or shorting next.
Today is Watchlist Wednesday, so I'm discussing three companies that have crossed my radar in the past week -- and at what point I may consider taking action on these calls with my own money. Keep in mind that these aren't concrete buy or sell recommendations, nor do I guarantee I'll take action on the companies being discussed weekly. What I can promise is that you can follow my real-life transactions through my profile and that I, like everyone else here at The Motley Fool, will continue to hold the integrity of our disclosure policy in the highest regard.
J.C. Penney (NYSE: JCP)
The experiment has been a monumental failure thus far, with Johnson caving in on reintroducing sales and online sales improving only modestly. What really stands to be a thorn in Penney's side is the upcoming litigation between it and Macy's (NYSE: M) over the rights to sell Martha Stewart Living Omnimedia products in its stores.
Penney's has taken a 16.6% stake in Martha Stewart Living and plans to introduce mini-shops -- one featuring Martha Stewart's products -- within its stores. Needless to say, despite her troubled past, Martha Stewart's products are still a force to be reckoned with in regard to driving traffic into retail stores. Macy's, however, contends that it entered into an agreement with Martha Stewart Living Omnimedia in 2007, long before Penney's entered into its pact with Martha Stewart Living, which should preclude Penney's from selling these products until 2018. The case, which is readying to get under way in New York, won't doom either party, but Penney's clearly has more on the line to lose if the judge sides with Macy's. Keep a close eye on this case, as Martha Stewart could be the biggest traffic driver Penney's has in its deck.
Affymax (NASDAQ: AFFY)
While I'd like to say an 85% haircut is grounds for a rebound, I think the company could unfortunately fall another 50% to 75% from its current levels and would consider betting against it on any rally in the interim.
The reasons are simple. First, recalls that result in death rarely are easy fixes. The FDA isn't going to allow Affymax to just simply slap a black-box label on there and "ta-da," problem solved. We're probably looking at multiple new safety aspects being looked at and potentially one or more safety trials being run.
Second, Affymax's entire pipeline is built around Omontys. Its only other trials are a late-stage dosing trial with Omontys and a mid-stage overseas study utilizing Omontys to treat patients with anemia caused by pure red cell aplasia. Without Omontys, Affymax has enough cash to perhaps survive another two years if it announces layoffs and cuts back on R&D.
Finally, even if -- and that's a big if -- Omontys makes it back to market, Amgen (NASDAQ: AMGN) will have further solidified its market share lead in anemia treatments with Epogen. Amgen's Epogen has basically controlled the market for two decades, and multiyear agreements with the nation's top dialysis centers ensure that Affymax will have a rough go of things if it manages to revive Omontys.
Annaly Capital Management (NYSE: NLY)