People watch stocks for different reasons -- they're waiting for a dip in price, watching for a specific catalyst, gathering all the news and information that might affect stocks they already own, or considering a sell. Regardless of their motivation, we can better understand market sentiment by seeing who's watching what. With the Fool's free My Watchlist service, we have tens of thousands of people telling us the businesses that have, for whatever reason, piqued their interest.

With this data we have come up with a new metric, watch interest, to inform investors what stocks their peers keep tabs on in each industry. In the case of the diagnostic substances industry, watch interest is the percentage of people keeping an eye on diagnostic substances stocks in general who are specifically watching each company. By looking at what stocks people are most interested in an industry, you can get ahead of the curb by finding hot stocks that you might have otherwise overlooked. The industry has been doing well with some new drug approvals in the U.S. and abroad. Analysts also believe buyouts could be on the way for some companies after the debt crisis the past few years, though some analysts are worried commercial banks are beginning to repeat the same mistakes that got them in so much trouble.

The most-watched diagnostic substances stock is...
Looking at the aggregate data, we see that Human Genome Sciences (Nasdaq: HGSI) is above the rest in terms of watch interest and for good reason. As CAPS player cllqmb wrote in March:

There is no reason that this company shouldn't outperform over the next several years. They just had an FDA approval on BENLYSTA, their lupus drug, and the sales from that alone should shoot revenues through the roof. Good management and sales outlook.

Here are the rest of the 10 most-watched companies in the industry with their watch interest along with the stocks' CAPS rating to show the sentiment of our investing community.

 

Company

Market Cap (in millions)

CAPS Rating (out of 5)

Watch Interest

1

Human Genome Sciences

$4,650

**

39.9%

2

Peregrine Pharmaceuticals (Nasdaq: PPHM)

$134

**

8.6%

3

Lexicon Pharmaceuticals (Nasdaq: LXRX)

$564

****

7.0%

4

Myriad Genetics (Nasdaq: MYGN)

$1,994

****

6.5%

5

Immunomedics (Nasdaq: IMMU)

$315

***

6.2%

6

Palatin Technologies (AMEX: PTN)

$38

*****

5.1%

7

Genomic Health (Nasdaq: GHDX)

$834

*****

3.8%

8

Pharmacyclics (Nasdaq: PCYC)

$701

*

3.4%

9

Nymox Pharmaceutical (Nasdaq: NYMX)

$293

*

2.8%

10

AMAG Pharmaceuticals (Nasdaq: AMAG)

$408

**

1.9%

Sources: Motley Fool, Motley Fool CAPS.

Whether you're keeping an eye on the industry stalwarts or are looking for the next up-and-comer, it pays to watch. We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service. Click here to start now.

Dan Dzombak's musings and articles he finds interesting can be found on his Twitter account: @DanDzombak.

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