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 what's really moving the market. Even worse, without my watchlist, I'd be lost when it came time to choose what stock I'm buying or shorting next.
What I intend to do as an experiment is to make every Wednesday "Watchlist Wednesday," where I'll discuss 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, 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.
This week is completely devoted to those of you looking for short-selling ideas.
Investors once again have blinders on and seem to have completely forgotten about the Dendreon and Human Genome Sciences
VIVUS last week received the thumbs up by a vote of 20-2 from the FDA advisory committee to approve its obesity drug, Qnexa. No obesity drug has been approved by the FDA in 13 years, and the only two currently approved treatments on the market are Roche's Xenical and its over-the-counter counterpart, GlaxoSmithKline's
Qnexa isn't approved yet; it merely got the nod from the FDA advisory panel, which the FDA doesn't have a perfect track record of following. In addition, as we saw with Human Genome's lupus treatment Benlysta and Dendreon's Provenge, getting approval is just one step on the path to success. Actual sale generation and the launch of a drug are what determine the real worth of a biotechnology company. I'm not saying Qnexa couldn't be a great new treatment for obesity, but it isn't worth getting yourself in a buzz over -- at least not just yet.
Nearly every time oil tops $100, Pacific Ethanol becomes the flavor of the week. As to why, I'm not so sure, because the company has yet to turn a profit -- unless you consider the one-time gain it recognized in 2010, when it exited bankruptcy!
Earlier this week Pacific Ethanol reported fourth-quarter results that typified what we've come to expect from the ethanol producer over the years. Revenue rose 80%, and total volume sold jumped 53% for the quarter. But in the end, as always, the company lost money. When push comes to shove, Pacific Ethanol hasn't been able to get in the black. I'll give the company credit for paying down $35 million in debt, but it's getting no help from declining ethanol prices and margins.
Every time I think of freight company YRC Worldwide, all I can think of is a commercial from the mid-1980s where Orville Redenbacher is drowning in a sea of his own popcorn. But instead of popcorn, YRC is drowning its shareholders in secondary offerings in an attempt to recapitalize the company. Last year, YRC did just that: It issued 1.85 billion new shares to generate $100 million in new capital, and then enacted a one-for-44 reverse split in December. Talk about drowning your shareholders!
If you thought that was the worst of it, you have another thing coming. When YRC restructured its debt, its lenders set certain EBITDA requirements that YRC would have to hit in 2012. For the recently reported first quarter, it met that target, but management cautioned in a separate note that it may not be able to meet lenders' aggressive EBITDA targets for the remaining quarters. Shares have fallen from a split-adjusted level of almost $162,000 10 years ago (nope, not a misprint) to just $10.31 as of yesterday's close.
Is my bullishness or bearishness misplaced? Share your thoughts in the comments section below and consider following my cue by using the links below to add these three companies to your free, personalized watchlist and keep up on the latest news with each company.
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Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He's a total nerd when it comes to making lists. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
The Motley Fool owns shares of Dendreon. Motley Fool newsletter services have recommended buying shares of GlaxoSmithKline. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that believes transparency comes first.