Easy come, easy go. The day after the Dow Jones Industrial Average (INDEX: ^DJI) jumped 136 points on better-than-expected payroll numbers, it tumbled back 140 points after the unemployment rate ticked up to 7.9%. Jobs numbers may have risen above expectations, but it shows it's still a very anemic recovery.
Yet some stocks managed to go the other way and score big gains, some even rising by double-digit percentages. Below are three that bucked the riptide that swept most Dow stocks out to sea.
Dendreon (NAS: DNDN)
Quantum (NYS: QTM)
Threshold Pharmaceuticals (NAS: THLD)
Yet resist the urge to high-five everyone in the cubicles next to you. Smart investors won't celebrate until they know why their stock surged, because without a fundamental basis for the bounce, these stocks could just as quickly make the return trip down.
Solid as a rock?
For biotech Dendreon, the market decided its quarterly results were on the glass-half-full side despite falling sequential sales of prostate cancer drug Provenge. They were up 27% year over year, and sales to its target market of community urologists rose 14%, so investors apparently think the drugmaker is on the right track. And with community oncologists trending flat, it was seen as an improvement over the 8% decline it experienced in the second quarter.
After initial reluctance on reimbursements because of its high price, Dendreon is seeing greater acceptance by insurers as Aetna (NYS: AET) , which recently announced it will expand its coverage policy to include the cancer drug. While its restructuring costs more than doubled to $80 million, the process should save the biotech $150 million annually when completed.
I'm still concerned about competition from Johnson & Johnson's (NYS: JNJ) Zytiga, which may have been partly responsible for blunted sales this quarter, though management thought it had more to do with their turnover is sales personnel. Dendreon also says doctors advise them it's not going to be an either-or decision when it comes to treating prostate cancer; rather, they'll be using all the arrows in their quiver -- meaning they'll treat with Zytiga and Provenge .
So Friday's gain afforded investors a nice bounce, but Dendreon needs to prove it can withstand gains being made by the competition. Tell me below in the comments box which way you think the biotech's results will head in the fourth quarter.
Back from the dead
Data-storage specialist Quantum also reported better-than-expected quarterly earnings the other day, but like Dendreon it was still recording losses rather than profits. What allowed the stock to jump 16% the day after its results was the decision by private equity firm Starboard value to take a 15.9% stake in the company with the idea of gaining two seats on the board of directors.
Looking to "dramatically increase profitability and unlock value for shareholders," Starboard is hoping to shake things up, and investors are ready for someone to make the board quiver.
While playing in one of the biggest sandboxes there is these days in technology -- data encryption and storage solutions for physical, virtual, and cloud providers -- it's also been one that's attracted a bevy of competitors. Yet fundamentals in the space have been eroding for months as IT spending falters, leading to downgrades at Riverbed Technology (NAS: RVBD) and EMC (NYS: EMC) , and underperformance by Datalink (NAS: DTLK) and NetApp (NAS: NTAP) . A fresh set of eyes just might be what Quantum needs to turn things around and prevent further market-share losses.
Last October was something of a mixed bag for biotech Threshold Pharmaceuticals, though by looking at its stock you'd think there was nothing good to come of the various news reports about the stock: Shares are down more than 30% over the past month.
Friday's bounce was also due to earnings beating expectations, but investors aren't really thinking about that right now. The real concern is its pancreatic cancer therapy TH-302 that had its clinical trial results clouded by tests it wasn't designed for. Threshold reported that patients treated with a larger dose of the drug survived 9.2 months, while patients receiving a smaller dose lived for 8.7 months. That compared favorably with the 6.9-month survival rate for those only being treated with Eli Lilly's (NYS: LLY) Gemzar, except the trials weren't designed to say if this was statistically significant. Removing "crossover" patients, or those who began taking TH-302 after their tumors started growing again, distorted the results.
I rated Threshold earlier this year to outperform the market on Motley Fool CAPS, as TH-302 will ultimately prove successful. It was granted a special protocol assessment by the FDA, and I believe the treatment will win out. Let me know in the comments section below if you agree Threshold Pharmaceuticals will prevail.
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The article 3 Stocks Beating the Dow's Backpedal originally appeared on Fool.com.
Rich Duprey has no positions in the stocks mentioned above. The Motley Fool owns shares of Dendreon, EMC, Johnson & Johnson, and Riverbed Technology. Motley Fool newsletter services recommend Johnson & Johnson and Riverbed Technology. 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. The Motley Fool has a disclosure policy.
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