3 Stocks Stopping the Presses
You saw the headlines. You know your stock price made a big move. But what does that portend for your investment's future?
By pairing the latest news with the collective wisdom of our 180,000-strong Motley Fool CAPS investing community, we might be able to discover whether your stock's latest exploits are a short-term hiccup -- or the start of a much bigger trend.
The following stocks have all made big moves over the past five days.
CAPS Rating(out of 5)
Change Past Week
|IntraLinks Holdings (NYS: IL)|
|Amarin (NAS: AMRN)|
|Universal Display (NAS: PANL)|
Source: Motley Fool CAPS; % change from Aug. 5 to Aug. 12.
A high-speed crash and burn
Some business transactions are so complex and paperwork-intensive that the entire time-sensitive nature of the financial structure hinges on having the process go as smoothly as possible. EPIQ Systems (NAS: EPIQ) , for example, focuses exclusively on streamlining the bankruptcy process because of the complexity of the transaction.
IntraLinks Holdings also tackles these critical transactions but takes the massive paperwork burden and puts it in the cloud, creating a simplified and organized arena where all parties involved can share and collaborate on the work. Importantly, the software-as-a-service platforms created are secure, compliant, and auditable, so there is a record of who did what when.
Its exchanges have proved useful for bankruptcies, M&A transactions, regulatory compliance, and general legal practices. It's a mundane business, but virtual data rooms are competitive, putting IntraLinks up against bigger and better financed rivals, such as RR Donnelly & Sons (NAS: RRD) and privately held Merrill.
The document specialist issued second-quarter financials last week that it said met or exceeded its past guidance, but it gave flat revenue guidance for the third quarter with hardly any profit growth. Some analysts think IntraLinks is in for an extended downturn given market conditions. Worse, and what probably spooked investors the most, was the disclosure that it received an SEC subpoena related to the company's operations this year, though specifics were not available.
Although the CAPS community is generally bullish on IntraLinks, and all two dozen All-Stars rating the firm believe that it will outperform the broad market averages, Jeffrey2012 suspected last month that its stock contained a lot of froth.
Valuation is [ridiculous] for what they are offering in growth. Another stock with cloud frenzy causing out of line valuations and finally getting popped. While they do have a good business and it's growing, it has gone way above and beyond what they are valued for right now.
Let us know on the IntraLinks CAPS page whether you agree that its streamlined stock price is a more appropriate valuation.
Taking heart in the future
If all Amarin's AMR-101 fish oil drug did was reduce triglycerides better than GlaxoSmithKline's (NYS: GSK) Lovaza, it would have a strong revenue-stream winner on its hands. After all, Lovaza generated $850 million for GSK, up 17% from the year before, and is expected to hit the $1 billion mark this year.
But Amarin wants to go further. It got a boost last week because it wants to expand AMR-101 to also be used as a treatment for reduction of cardiovascular events like heart attacks and strokes. While that's going to require new testing, the FDA has approved its new trial design, and Amarin will begin enrolling patients in the trials.
The dyslipidemia market -- that is, a combination of high cholesterol and triglycerides -- was valued at over $34 billion in 2009. It's expected to shrink to $26.3 billion by 2016, but only because Pfizer's Lipitor is going off patent this year and lower-cost generics will flood the market. It's still a huge opportunity.
A buyout has always been part of the hope investors held for Amarin, even if management disappointed them by saying it wants to fly solo. Still, CAPS member headyinvestor is convinced that this is how it will ultimately play out: "Really surprised the stock is trading this low following the positive results from ANCHOR. Will end up being gobbled up next time they need cash..."
Add Amarin to the Fool's free portfolio tracker and see whether it grows or ends up swimming with the fishes.
Achieving smart growth
Universal Display lit up the market last week, reporting record revenues and profits as handset makers like Samsung and LG Display (NYS: LPL) drove business higher. Universal makes the display panels on smartphones, one of the few truly hot consumer-electronics segments.
Although a long-term contract with Samsung has yet to be agreed to, Universal Display remains content with the current three-month contract extensions it operates under. But investors should probably expect a long-term agreement, as negotiations are ongoing and Samsung is committing large investments in the OLED market.
That could really be what puts this OLED technology specialist into a leadership position, since as CAPS member blisterman notes, smartphones still have plenty of global runway yet: "OLEDs are the future of Smartphones, though they are still a luxury for much of the world's population. The market has huge growth potential worldwide."
Add Universal Display to your watchlist, and then head over to the Universal Display CAPS page to display your own opinion on its future.
At the time this article was published The Motley Fool owns shares of GlaxoSmithKline. Motley Fool newsletter services have recommended buying shares of Universal Display, Pfizer, EPIQ Systems, and GlaxoSmithKline. 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.
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