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.
3D Systems (NYSE:DDD)
Make no mistake about it, 3-D printing technology is cool and it is the future. Unfortunately, as I've stated on numerous previous occasions, we as investors are horrible predictors of when a technology will actually become viable.
It was almost a full decade after Amazon.com's marketplace and cloud platform took shape that it finally took off. Similarly, DNA sequencers like Life Technologies didn't see their technology take off until the price point lowered and turnaround quickened. For 3-D printers like 3D Systems and Stratasys (NASDAQ:SSYS), we're in that same phase. We're seeing tangible profits and growth, but much of this is being achieved through rapid-fire acquisitions and not organic growth.
The expectation of success has resulted in a ridiculously lofty valuation for 3D Systems: eight times book, 11 times sales, and nearly 41 times forward earnings. You might be fooled by its rapid growth rate, but again I'd point to its lack of rapid organic growth and investors' poor history of timing breakthrough technologies. If anything, I much prefer Stratasys and its recent purchase of Objet, which offers considerably more specialized printing capabilities for enterprises. If it heads any higher, 3D Systems might become the perfect short-selling or put-buying candidate.
RF Micro Devices (UNKNOWN:RFMD.DL)
This one's a little tricky on the surface, because you'd think RF Micro is in trouble considering the report from The Wall Street Journal that Apple is going to be cutting its iPhone 5 parts supply orders. RF Micro actually supplies one of the radio-frequency switches in the iPhone 5 and could, therefore, be liable for a slowdown in revenue if this report proves accurate and iPhone demand was slower than anticipated.
Let's also look at this from another angle too. Consider that Apple remains a very small piece of the revenue pie for RF Micro. Instead, RF counts Nokia and its multigenerational phones as one of its stronger customers. With Nokia's smartphone, the Lumia, selling better than expected, and still netting a decent amount of sales on 2G and 3G devices in emerging-market territories, RF Micro's customer profile is widening. With widening customer exposure comes less business cyclicality and a better chance that RF will surpass analysts' expectations for the full year. Needless to say, this could be a surprise winner in 2013.
Since it was spun off from Abbott Laboratories, I've been keeping a close eye on AbbVie, the branded-drug division of Abbott. A lot is riding on AbbVie's pipeline because Humira represents the single-biggest revenue generator at the moment and it's scheduled to begin losing patent protection in 2017.
Of particular interest to me is AbbVie's hepatitis C program, which demonstrated 97.5% and 93.3% efficacy in achieving a sustained virologic response after 12 weeks with its trio of direct acting antivirals in two targeted genotype phase 3 trials.Although these results are below the perfection achieved by Gilead Sciences with Sofosbuvir, it boasted higher patient totals and thus deserves just as much merit as the Gilead study. AbbVie's hepatitis C drug looks well on its way to becoming a stand-alone or combination therapy in the near future along with Sofosbuvir. Given a very large market, there's no reason these two can't share the market with room to spare and both reap significant revenue.
Is my bullishness or bearishness misplaced? Share your thoughts in the comments section below, and consider following my cue by using these links to add these companies to your free personalized Watchlist to keep up on the latest news with each company:
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 recommends 3D Systems, Amazon.com, Apple, and Stratasys. The Motley Fool owns shares of 3D Systems, Amazon.com, Apple, and Stratasys and has the following options: Short Jan 2014 $55 Calls on 3D Systems and Short Jan 2014 $30 Puts on 3D Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.