Some stocks are one-hit wonders; they make a big splash when they first appear then quickly fizzle into obscurity or oblivion. But for other stocks, that initial big move is only a preview of 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.
1 Month % Change
Transcept Pharmaceuticals (NAS: TSPT)
Agria (NYS: GRO)
MELA Sciences (NAS: MELA)
Source: FinViz.com. One month % change from June 24 to July 25.
While you were out, the markets collapsed and may continue to do so as the impact of the U.S. credit downgrade 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.
A mighty temblor
We like bold talk from management just as much as anyone, but Transcept Pharmaceutical's plan to resubmit its NDA to the FDA for its insomnia drug Intermezzo seems audacious.
In July, the FDA sent a complete response letter to the drug maker, which said there were many concerns the agency had, and while most did not require additional study, the drug's impact on driving impairment after dosing meant a new study might be warranted. Transcept, however, decided it was resubmitting its NDA only after reducing the recommended dosages for woman and including additional safety instructions for its use. That hardly seems in line with what the FDA was looking for.
Intermezzo, which is for people who wake up after having been asleep but are unable to go back to sleep, has had a difficult road to approval having been rejected several times. So, as much as Transcept might want to get the drug to market, it would seem better to take a more prudent course.
Even if it is approved it will be competing against drugs like Ambien from Sanofi, Silenor by Somaxon Pharmaceuticals (NAS: SOMX) , and others. Although none are designed to address waking in the middle of the night, taking them before bedtime sort of makes that a moot point.
I might be wrong about the FDA agreeing to review Intermezzo again without a new clinical study. I might be wrong about their willingness to allow a class I review. Nevertheless I'm quite confident that even under the improbable circumstance that Intermezzo is indeed approved this year they will make a minimal commercial impact in a crowded field of insomnia medications populated with numerous generics.
Share your thoughts on where the drug developer will go on the Transcept Pharmaceuticals CAPS page and put it on your watchlist to keep track of its progress.
Addition by subtraction
Chinese agriculture company Agria got a boost by completing the divestiture of a finance unit owned by a New Zealand-based subsidiary. PGG Wrightson Finance was sold to Heartland New Zealand for $84 million; an important move because it reduced the amount of debt the subsidiary had on its balance sheet, letting it focus more sharply on its agri-business services. For Agria, it was a sweet deal, because only four months ago it had increased its stake in the subsidiary to majority status and now has a much leaner operation there.
Agria now concentrates on developing corn seed solely for human consumption (as opposed to growing it also for feedstock), but it's a market also targeted by Origin Agritech (NAS: SEED) and Monsanto (NYS: MON) .
CAPS member monkey222 points to the billions of people needing to eat as a reason why the stock should rise, which probably helps explain why only one out of 100 CAPS All-Stars has rated the agriculture company to outperform the market. Tell us in the comments section below or on the Agria CAPS page if you see it developing any growth from here.
Searching for a solution
MELA Sciences knows something about the arduous path Transept has taken, for it's faced harsh scrutiny itself from the FDA over its MelaFind cancer detection device. But earlier this month it got approval from European regulators to market the device over there and that's what sent shares soaring.
The MelaFind emits light waves to capture images of suspected lesions and uses a sophisticated algorithm trained on MELA's database to analyze the images and determine whether a biopsy is needed. It's a radical departure from the methods employed by industry giants like General Electric (NYS: GE) or Siemens, whose PET/CT scanners need an individual to pore over the images and make the determination.
But zzlangerhans weighed in here as well, and dismisses the significance of having earned the CE mark of approval.
It remains to be seen whether this designation will translate into European sales of the device which is in regulatory limbo with the FDA and whose PMA will likely never be approved. I suspect that European physicians and dermatologists won't be fooled by the company's spin of their validation study data
Let us know on the MELA Sciences CAPS page if you think the achievement can lead to significant returns for investors.
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 thisarticle was published Fool contributor Rich Duprey holds no position in any company mentioned. Click here to see his holdings and a short bio. Motley Fool newsletter services have recommended creating a synthetic long position in Monsanto. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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