3 Stocks Shaking the Market
Some stocks are one-hit wonders, making a big splash when they first appear, then quickly fizzling into obscurity or oblivion. But for other stocks, that initial big move is only a preview for even bigger and better gains to come.
Today, we've listed three stocks that made some of the biggest upward moves over the past month, despite the incredible volatility in the market, which we'll pair with the ratings issued by our Motley Fool CAPS community. The higher each stock's rating, the greater CAPS members' faith in that company's ability to keep on beating the market.
|Orexigen Therapeutics (NAS: OREX)||60130%||**|
|Rambus (NAS: RMBS)||42.7%||**|
|Smart Balance (NAS: SMBL)||36.7%||***|
Source: FinViz.com; 1 Month % change from Sept. 6 to Oct. 6.
While you were out, the markets collapsed and may continue to do so as the impact of economic uncertainty around the world filters through. So before we get shaken out again, let's see why the CAPS community thinks some of these companies might continue to outperform the market.
Back from the dead?
In Monty Python and the Holy Grail, Eric Idle's "Dead Collector" character wheels his barrow through the streets, collecting the bodies of plague victims. John Cleese brings one out but as he's about to throw it on the cart, the body says, "I'm not dead!"
That seems an apt metaphor for the FDA, the market, and obesity-drug maker Orexigen Therapeutics, which had been laid low by the regulatory agency's refusal to approve Contrave. The market wanted to toss the stock onto the dead collector's wheelbarrow, but last month Orexigen was saying, "I feel happy. I feel happy!"
Along with Arena Pharmaceuticals (NAS: ARNA) and Vivus (NAS: VVUS) , Orexigen has a high wall of worry to climb to overcome FDA fears of another fen-phen debacle. The agency was taking no chances on approving weight-loss drugs that may someday come back to bite it by proving to have been too dangerous. It seemed the FDA would rather bully them and toss everyone on the dead cart than take any chances.
But Vivus has apparently won a reprieve for the time being, saying that it reached an agreement with the FDA to seek approval for its Qnexa drug. And Orexigen feels comfortable "reinitiate[ing] development of Contrave" after meeting with the agency. The stock, which lost 80% of its value in the wake of the original decision, isn't hale and healthy just yet, but its recent pop shows that it's definitely not dead.
CAPS All-Star quinpeung isn't buying it, though, thinking Orexigen is going to have to come up with a ton of money to finance the trials the FDA is seeking: "10,000 patient safety assessment needed !!! Can you say dilutive financing?"
Share your thoughts on the Orexigen Pharmaceuticals CAPS page if you think it will come back from the dead, then put it on your watchlist to keep track of its progress.
Rambling legal wrangling
As the patent litigation trial moves forward, Rambus investors are feeling confident their chip maker is proving its case in court and expect a positive verdict to vindicate their years of wandering in the wilderness.
Rambus claims that Micron (NAS: MU) and Hynix Semiconductor colluded to lower their prices and conspired to deny Rambus' RDRAM chips the chance to become the industry standard. But Micron and Hynix argue that Rambus' chips were simply inferior to DDR SDRAM, which eventually became the standard.
Not everyone is convinced Rambus' case holds water, as the Fool's Anders Bylund thinks it reveals a need to fix a broken patent system, but the chip maker's partisans -- and they are legion, or at least vocal -- expect vindication. And 84% of the CAPS members rating Rambus think it will outperform the market, suggesting they're also hopeful about its court battle.
Tell us in the comments section below or on the Rambus CAPS page if you see it developing any growth from here, and add it to your watchlist to be updated on any court developments.
A slim chance
Patent infringement litigation was also lifting Smart Balance, a consumer food products company that holds patents that decrease LDL cholesterol -- so-called "bad cholesterol" -- while raising HDL cholesterol, the "good kind."
Smart Balance sued more than a dozen rivals, including General Mills (NYS: GIS) , Kellogg, and Nestle. In addition to asking for its rivals to cease and desist, Smart Balance wants damages, litigation costs, and attorneys' fees, as well as extra damages to punish their behavior.
CAPS member JustaStudent thinks the food company has the right products at the right time, though it may lag somewhat in this recession:
Several of the last quarters, SMBL has exceeded EPS expectations. The macro trend of country is toward healthful foods. However, sales will be slightly soft in this recession due to slightly higher prices relative to comparable regular food products.
Add the stock to the Fool's free portfolio tracker and keep watch on whether it can slim down its competitors' pockets by winning its court case.
Shake, rattle, and roll
With these stocks shaking the market this past month it pays to start your own research on them at Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page.
At the time this article was published Fool contributorRich Dupreyholds no position in any company mentioned.Click hereto see his holdings and a short bio.Motley Fool newsletter serviceshave recommended buying shares of Kellogg. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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