Despite all of Wall Street's conflict and contention, a fortunate few companies enjoy unanimous support among professional analysts. If the market's movers and shakers all believe these companies will beat the long-term averages, well, surely they will -- right?
Not so fast! With help from the 180,000 members of Motley Fool CAPS, we'll see whether these highflying favorites deserve analysts' unwavering support.
CAPS Rating(out of 5)
CAPS Bullish Sentiment
Number of Wall Street Analysts
52-Week Price Change
MIPS Technologies (NAS: MIPS)
Raptor Pharmaceuticals (NAS: RPTP)
SodaStream (NAS: SODA)
Source: Motley Fool CAPS; NA = not available. SODA went public 11/3/10.
Taxiing for takeoff
I just ended my outperformance pick on CAPS for MIPS Technology, and if I had owned its stock in my real-life portfolio, I'd probably have sold the shares, too. I just can't cotton to management that misleads its shareholders.
Pretty strong words, I know, but two quarters ago it failed to meet expectations despite CEO Sandeep Vij's assurances that there were big doings afoot. Last quarter I said I'd give MIPS another chance since Broadcom (NAS: BRCM) had also reported disappointing results, suggesting that it might be more than company-specific issues. Still, I was cautious, given that Vij started quoting stuff about "marathons."
Well, fourth-quarter and full-year earnings are out, and investors might want to consider getting another pair of sneakers because the promised goal seems further off than ever. Revenues dropped 25% and profits came up short at just a penny a share, compared with $0.12 a year ago. Royalty revenue fell 5% while licensing revenues plummeted 47% year over year.
Sure, another connected device chipmaker, Entropic Communications (NAS: ENTR) , had a bad quarter, but where are all those deals MIPS promised us? Maybe if you run just a little bit further you'll see them, but I'm not hanging around. Fool me once, shame on you. Fool me twice, shame on me -- and MIPS shamed itself by overpromising and underdelivering. The CAPS community has been very supportive of MIPS, but that might change after being disappointed yet again. Let us know in the comments section below or on the MIPS Technologies CAPS page whether you think it's wise to invest in MIPS on its dips.
Niche biotech Raptor Pharmaceuticals targets underserved illnesses like nephropathic cystinosis, a rare genetic disorder, and non-alcoholic steatohepatitis, a metabolic disorder of the liver. This strategy maximizes profits and minimizes the competition -- or at least that's the theory. So far, the company is in the development stage, so it doesn't have any drugs on the market, although its lead candidate, DR Cysteamine, recently met the end goals of a late-stage study.
Apparently, though, those results weren't enough for the market, which dropped the stock 28% as there was some concern over the development of serious side effects. Although only one patient's condition was possibly related to the drug, the markets these days are taking no chances. Dendreon (NAS: DNDN) got cut in half (and then some) after its cancer treatment Provenge showed a slower-than-expected uptake.
The topline data for DR Cysteamine was positive, in an unfulfilling non-inferiority way, but a long road remains before the drug is ready to take on generic Cystagon. It's still unclear how much commercial strength DR Cysteamine will have and what price point will compete sufficiently with the generic. As Raptor deals with preparing for their NDA submission and determining whether they will partner the drug or market it alone, they're looking at a picnic basket with less than 10 million in cash. There's no question that a fairly large dilutive financing is around the corner.
Add Raptor Pharmaceuticals to your watchlist to keep tabs on whether its results will hold you in rapt attention.
Hold off on the champagne
I remain convinced that SodaStream investors aren't going to be popping any bubbly for very long, even if the stock has run 50% higher since I marked it on CAPS to underperform the broad market indexes back in March.
Last week, shares of the "home brew" soda-machine maker surged 11% higher just on the company's announcement that it was reporting its earnings this week. There's more froth built into this stock than on a glass of root beer. It was also carried higher by the earnings report of Green Mountain Coffee Roasters (NAS: GMCR) , a company that paved the way with the make-your-own-drinks business model.
I admit, I was completely wrong about Green Mountain's chances for success, but I think there might be a difference between coffee and fizzy soda. People have been brewing their own coffee for hundreds of years; homemade soda, not quite so long.
I'm in the minority on CAPS, I know, where All-Star hejustlaughs points to SodaStream as being a "healthier and greener" alternative to regular pop, but I agree with GUVF nonetheless that the home soda craze is little more than a fad.
Ridiculous. Impossible for this fad gadget maker to grow into a 1.5B market cap. Can't and won't happen.
Drink in some other opinions on the SodaStream CAPS page, and add its stock to the Fool's free portfolio tracker for complete coverage of its developments.
Agree to disagree
It pays to start your own research on these stocks on 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.
Sign up today for the completely free service, and tell us whether these stocks deserve to have Wall Street marching in lockstep.
At the time thisarticle was published Motley Fool newsletter services have recommended buying shares of SodaStream and Green Mountain Coffee Roasters and creating a lurking gator position in Green Mountain Coffee Roasters. 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.Fool contributor Rich Duprey has no financial position in any of the stocks mentioned in this article. You can see his holdings. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.