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Why Canopy Growth, Kiniksa Pharmaceuticals, and Paycom Software Jumped Today

By Dan Caplinger – Nov 20, 2019 at 4:33PM

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A much-needed vote of confidence lifted an entire industry.

Wednesday wasn't a great day on Wall Street after investors finally gave in to fears that a trade deal between the U.S. and China might not come as quickly as hoped. Much of the recent market rally seemed to take for granted that the two nations would at least find a limited amount of common ground, but it could take until next year even to make the initial steps toward a broader agreement. Even with the major benchmarks finishing lower, some companies had good news that powered their stocks higher. Canopy Growth (CGC -1.96%), Kiniksa Pharmaceuticals (KNSA -0.44%), and Paycom Software (PAYC -1.11%) were among the top performers. Here's why they did so well.

Canopy bounces back

Shares of Canopy Growth climbed 15%, regaining some of the ground the marijuana stock has lost over the couple of weeks. Cannabis stocks had generally poor earnings reports last week, and Canopy wasn't immune, with fears that the Canadian market might not be growing at the pace investors had counted on seeing. Yet analysts at Bank of America Merrill Lynch upgraded Canopy from neutral to buy, saying that the recent plunge in Canopy's share price gives the marijuana stock a reasonable valuation. Moreover, they think that inventory-related headwinds will abate soon, and that could pump the company's sales volume back up. Given how far cannabis stocks have fallen, a lot of investors are looking at them as a potential value play.

Two fingers holding a marijuana leaf, with dozens of cannabis plants in background.

Image source: Getty Images.

Kiniksa makes a breakthrough

Kiniksa Pharmaceuticals saw its stock soar 29% following its announcement that one of its candidate drugs has been designated a breakthrough therapy. After having displayed strong trial results in a phase 2 study of its pericarditis treatment rilonacept, Kiniksa found out that the U.S. Food and Drug Administration had given the drug breakthrough status. The FDA decision makes it easier for the company to move rilonacept through the approval process, with the potential to make it available to patients as soon as 2021. Even so, Kiniksa shareholders still have to hope that the drug will do as well in phase 3 trials taking place over the next year or so.

Paycom pays off

Finally, shares of Paycom Software picked up 9%. The payroll and HR services provider got an upgrade from analysts at RBC Capital, who lifted their rating on the stock from sector perform to outperform and raised their target price by $48 to $278 per share. RBC thinks that the company has a solid pathway to sustained growth by taking advantage of high retention rates and using its pricing power to gather more clients and compete more effectively against rivals. Paycom has already delivered amazing returns for its long-term shareholders, but if it can continue to put its software-as-a-service business model to work, then there should be even more opportunities to keep growing in the future.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Paycom Software. The Motley Fool has a disclosure policy.

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