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. 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.
Exelixis (EXEL -2.59%)
Yesterday was a big day for Exelixis shareholders, as it gave them their first glimpse of Cometriq sales. Designed for the treatment of metastatic medullary thyroid cancer, or MTC -- a rare but particularly aggressive form of thyroid cancer -- Cometriq, which is Exelixis' first drug approved by the Food and Drug Administration, nearly tripled progression-free survival in trials relative to AstraZeneca's (AZN -0.57%) Caprelsa, the current standard of treatment (11.2 months compared to four months). Based on those stats alone, I expect Cometriq to take practically all sales from AstraZeneca in MTC.
Exelixis' first-quarter results released last night -- a $0.24 loss per share on $9.7 million in sales -- handily surpassed Wall Street's expectations, which had called for a loss of $0.29 per share on $5.3 million in revenue. However, only $1.9 million in sales was because of Cometriq. I can't say that I'm disappointed with this initial figure, but I'm not exactly jumping for joy, either.
Looking down the road, Exelixis shareholders have few catalysts this year aside from growing Cometriq's total sales. Next year is when things will get really interesting as Cometriq appeared to show significant efficacy in reducing metastatic bone tumors. If that proves true in trials currently being run with regard to castration-resistant prostate carcinoma, metastatic renal cell cancer, and metastatic hepatocellular carcinoma, then Exelixis could take off in 2014 when top-line data for some of these studies is revealed. I remain steadfast that Exelixis is a candidate for a big run higher moving forward.
Odyssey Marine Exploration (OMEX 2.58%)
I love a good metals play as much as any Fool around here, but Odyssey Marine is certainly not on the buy list. Odyssey Marine is a salvage company that searches for, recovers, and monetizes metals and minerals found on the ocean floor. Make no mistake about it, the job is as cool as it sounds; unfortunately, "cool" doesn't always translate into solid profits.
As my Foolish colleague Rich Duprey recently noted, a myriad of issues has been weighing down Odyssey's share price, including a decline in metals prices and, more important, an order to turn over some $500 million worth of gold and silver coins recovered from the 1804 shipwreck of the Nuestra Senora de las Mercedes to the Spanish government. Rich, however, sees positives in Odyssey Marine's mineral operations and thinks it could make an intriguing, but speculative, play as metal prices recover. As for me, I'd look for short-selling opportunities into any rally.
The concern I have with Odyssey Marine's business model is that it's based on high discovery costs, a copious amount of regulations (i.e., Spain's gold and silver reclamation), and is completely based on luck. There is absolutely no consistency in results from one quarter to the next, which can have a huge bearing on the company's cash flow and outlook. You may get lucky enough to hit this stock before a major find, but I'd suggest betting against it on any significant rallies until it develops a steadier revenue stream.
You know how I'm a staunch advocate for profitability?... Well, throw that out the window just this once!
SolarCity is a relatively newly traded solar company that sells or leases solar panels to residential and commercial customers. The prospect of leasing solar panels might seem idiotic at first until you realize just how expensive the purchase and installation of those panels can be. Once SolarCity makes its initial purchasing investment in the panels, it frees the company to set up recurring monthly revenue leasing streams. The best part is the costs from the consumer and business end could actually wind up dropping over the long run as standard fuel costs rise.
SolarCity also hasn't needed to advertise out the hilt. In fact, it's utilizing a similar marketing ploy to that used by Tupperware, which is to allow residential customers to set up in-home parties and gatherings that show off the uses of the product. Apparently this strategy must be working, as revenue grew by 22% in the fourth quarter as the total number of customers (presumedly residential) rose by 192%. While losses will be the name of the game for probably the next few quarters, I would be very intrigued to dig even deeper into SolarCity on any major pullback.
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: