The stock market is still looking for it's new bottom and millions of people are selling their holdings out of fear of what's to come. Indications are, we may be close to a bottom with the violent price swings we say today, and it's time to look at some rock-bottom deals.
There's billions of dollars that are sitting on the sidelines in low-interest money market accounts or government securities that will re-enter the market when the time is right, and we saw a taste of that today when the market actually hit 300 points up during the last half hour of trading.
My plan is to be in BEFORE the market rebounds. Chasing a stock run is never as much fun as being along for the ride.
In VFC's opinion, it's actually easier to find good stock picks in a down market, because many stocks are oversold. In an up market, many stocks are overvalued and you've got to tread carefully because any hint of a stock market correction could immediately send stock prices back to earth.
Short sellers take control when they feel a stock is overpriced, and when the market drops, it's the short sellers that bought at the highs that make money. Once the market begins to rebound, the short sellers will 'cover' and go long, and that's when we could be in for some pretty good rides.
With the crash of '08 in full effect, I'm on the hunt for some bargains, which is not unusual; I'm always on the hunt for good 'Risk vs Reward' stocks. Here's a few that VFC is looking at going forward. Most you've already seen here at VFC's Stock House.
VFC likes the following two stocks because these companies have both received recent drug approvals but their stocks have followed the market down. I believe these two have the makings of a rebound.
EPCT, Epicept Corporation:
Epicept has just received a full marketing authorization from the European Commission to market Ceplene in Europe. Ceplene treats patients with Acute Myeloid Leukemia (AML) in first remission and will be available to patients in 30 countries as soon as 1Q 2009. Ceplene is estimated to bring in approx $200 million per year and has been granted Orphan Drug states by the EMEA. The company President and CEO, Jack Talley, has indicated that there are ongoing talks for a European partner to market and distribute Ceplene. News on a partnership should come before year end.
Aside from Ceplene, Epicept has five additional drugs or treatments in their pipeline, most notably Azixa, a treatment for metastatic brain cancer which Epicept has partnered with Myriad.
Ceplene alone, now that it is approved, should have EPCT trading well above a dollar, or even closer to it's price target of $6.00 (according to Yahoo! Finance) but in this market investors are quick to take a profit (EPCT is a triple over the past few months), and short sellers are quick to take control.
When the Market rebounds, EPCT is a sure bet to rise.
- All biotechs are risky.
- Ceplene may not reach sales goals.
- Other drugs in the pipeline may fail trials.
- Partnership deal may not turn out to be profitable for the company.
- If Ceplene fails to reach expectations, the company may go bust before the completion of addtional trials.
- Ceplene is approved to be marketed and sold in 30 countries and will possibly bring in up to $200 million per year and Epicept's 50 million dollar Market Cap does not reflect the potential of the company. EPCT is undervalued.
- Company just received a $50 million stock/debt shelf which should be enough to cover expenses until Ceplene starts bringing in money, alleviating fear of the company going bust.
- Updates on Azixa trials have brought the EPCT stock to over four dollars in the past. Now, with an approved drug (Ceplene), EPCT could rised even higher than that on an Azixa update.
- Positive updates from the other four drugs in trials could add to any upward momentum.
Timeframe for Payback: When the market rebounds, EPCT should immediately begin to reflect the good news that the company has recently reported.
I also have EPCT as a long term pick, and will hold shares through the conclusion of Azixa trials, if not longer. I've traded in and out of EPCT in the past, and I'll sell into any large spikes and I'll buy into any dips.
AGEN, Antigenics Inc:
Antigenics, AGEN, has received approval to market and distribute Oncophage, an immunotherapy treatment to treat patients with cancer of the kidney, in Russia. The only large hurdle that would impede Antigenics quick launch of Oncophage was that the US FDA had to approve the exportation of Oncophage to Russia after being produced in the USA. The FDA has approved that export and, in VFC's opinion, due to the market conditions and probable short sellers who reacted to the news, the AGEN stock has declined nearly two-thirds of it's post-news value, to approx 60 cents.
Antigenics also intends to file a Marketing Authorization Application to the European Medicines Agency (EMEA) by the end of this year.
I believe AGEN has been manipulated (traded too high in the up-market after DNDN news last year, setting up an opportune time for shorts to get in) and this stock should recover to reflect the positive Oncophage approval when the market rebounds.
- Oncophage does not take off in Russia and fails to pull in serious revenue.
- Antigenics fails to gain approval for Oncophage anywhere else in the world.
- AGEN is undervalued even without approval in any other country.
- Reports indicated that Russian Doctor's looked forward to the approval and use of Oncophage in Russia.
- After the good news of export authorization, the stock has dropped over a dollar to sixty cents. A rebound should be looming.
I'm loading up on AGEN at under a dollar. In normal market conditions, I don't see this stock losing two-thirds of it's value after positive news. Again, another small biotech with an approved treatment. AGEN is primed for a rebound when the market straightens itself out a bit, or when news of the actual Oncophage launch hits.
The following are stocks that are down with the Market or because of economic conditions and should rebound nicely when the Market turns around and/or the economy picks up:
JWN, Nordstrom Inc:
Nordstrom is a high-end retailer that has fallen victim to the slowing economy and the downturn in the market.
People are looking for cheaper alternatives to the high-end luxury products of Nordstrom and that is taking it's toll on the bottom line of the company, and the stock price of JWN.
Nordstrom was trading near fifty dollars not too long ago and is currently trading under twenty. More bad news looms for Nordstrom, and other retailers, as the company and analysts predict a slow Holiday season. We may be afforded the opportunity to buy into this company at even lower prices.
As people regain confidence in the economy and start losing hold of their fears, they'll again start spending money on the high-end items that Nordstrom provides.
Nordstrom is a well-established name that has a wealthy clientele, and they will weather this downturn and rebound when the economy picks up.
- We're in for a long economic slide and JWN slides down along with it.
- People lose interest in the high-end products which Nordstrom offers.
Reward:- When the economy turns around and people start spending money again, Nordstrom rebounds along with the stock price.
- JWN is trading at a third of it's 52-week high as a result of the Market and economic slowdown. A rebound will be in order.
The market is probably at or near it's bottom, judging by the price swings during the last half hour of trading today, so JWN may level off as well. The fact that JWN may be oversold could offset more bad news that is due for the Holiday season, but I do expect to be able to buy JWN in the mid-teens. For now, I'm buying shares in the high teens and hope for a dip after disappointing 3Q results are out.
Once the economy gains steam again, JWN should rebound nicely.
Google recently turned ten years old, and for the last ten years, Google has become a staple in American Culture. The name Google invoked a new verb into our vocabulary and rendered other search engines as relics of the past. After GOOG's IPO of 80 dollars, the stock price surged to highs in the range of 700 dollars, before recently retreating into the low 300 dollar range.
The Google stock price got hit by disappointing in earnings, largely due to a crackdown on fraudulent clicks from the AdSense program, where advertisers 'Pay per click'. Naturally, once fraudulent clicks diminished, advertisers were not paying so much and Google did not rake in as much dough.
Once the economy headed south, advertising money was the first to go, handing Google another hit, as the bulk of their income is derived from Internet advertising. Along with the hit in revenue, GOOG is also an overall victim of the Market crash, and should rebound nicely when the economy rebounds.
Google, however, is giving investors more to think about than solely Internet advertising. Google recently announced their own Web browser to compete with Microsoft and they're also entering into the cell phone market.
Google is also putting it's money to good use in the form of researching alternative fuels, developing a new class of hybrid vehicles and continuosly looking for ways to hold the Government responsible for providing public services.
GOOG has been hit hard in this economy, no question, but this company is one for the ages and I'm taking advantage of this decline in stock price.
- People stop 'Googling' and clicking on 'Google Ads'.
- Google's ventures into areas outside the advertising realm fail.
- A prolonged economic downturn continues to hammer the GOOG stock price.
- The economy rebounds and advertising money returns to the norms.
- Google's ventures into the browser and cell phone markets are met with success.
- Google continues to grow it's brand name.
Honestly, this is one that VFC is holding for life. After missing the boat on Google's IPO, this is a stock that I am treating as a mutual fund, buying a little bit here and a little bit there. In the short term, Google should start rebounding when the Market rebounds. The stock was due for a correction, but VFC thinks GOOG is a tad bit oversold.
The Telecom sector has taken a huge hit in this economy, and we may have not seen the lows yet. On that note, AT&T (T) is trading at a two-year low, let alone it's 52-week low, but much of that could be attributed to the market conditions. The bad news may not be over for AT&T, and the rest of Telecom, as 3Q estimates are being re-estimated to the downside.
As with JWN, I'll be buying T when it's being kicked while it's down. Currently trading in the low twenties, it's possible that we see the teens when it's all said and done.
AT&T is an innovative and historic company, and that is why I'm picking it out of the Telecom sector, and I expect a nice rebound when this economic mess begins to clean itself up.
- AT&T is unable to rebound due to competition and market conditions.
- Trading at a 52-week low, there is plenty of room for T to rebound when the Market begins to rebound.
A couple of high-risk, high-reward stocks!
Sirius suffered big time during the 18 months that it took the Government to approve the merger with XM. Had the merger been approved in half that time, many of the cost-cutting measures put in place by the combined company would be paying fruition as I type, but that is not the case.
XM debt soared, and SIRI could not move forward without a final decision by the Government, so now we have a SIRI stock that is trading at below fifty cents. I look at this scenario in two lights.
ONE: Why was the Government so tied up investigating the SIRI-XM merger while the US Economy was on the brink of collapse? It's no wonder they had no time to prevent this mess with the time they spent on the SIRI-XM merger!
TWO: Again, Government inaction on the merger only hurt the little guy, the average investor. The big boys made out because they were heavily shorting the Sirius stock and the lobbyists made out because each company spent hundreds of thousands on lobbying costs and the Government made out because they 'benefit' from the lobbyists.
Here's where the little guy can make out. BUY SIRI at this price.
The amount of debt that this company holds is huge, but CEO Mel Karmazin wants to take care of this debt NOW, rather than LATER.
SIRI has been hit extra-hard in this market because the short sellers have been making money on SIRI during the whole ride down. It's also been hit hard because of the credit crunch. With opportunities of good credit agreements dwindling, the Sirius-XM credit crunch became an even bigger deal.
Yet another reason that Sirius-XM has been hit so hard, is the fact that the auto industry has been crushed, and SatRad is highly dependent on new car sales, where they can advertise their service for a few months and then drivers pay thereafter.
With all the bad news on the SIRI stock, it's still way oversold because of these market conditions (in VFC's opinion).
There is no guarantee that SIRI will rebound right away, and there is always the risk of a reverse-split or a bankruptcy, but Mel Karmazin has a great resume and I believe that SIRI will rebound when we start to see the results of the $450 million in synergies that are coming as a result of the merger.
Aside from the synergies, when the shorts cover and the XM-inherited debt is under control, investors should be in for an upturn.
Another option that is out there, but I have not seen anything except rumor on this, is the possibility of a buyout. It's always an option, as SatRad could be interfaced with such applications as cell phones, GPS, and other new-generation gadgets.
I'm buying lots of SIRI at these prices.
- Huge debt bill leads the company to bankruptcy.
- Company cannot recover from slumping auto and SatRad sales.
- Company is forced into less than acceptable terms in financing debt.
- Merger synergies don't pay off as much as planned.
- Possibility of a reverse split.
- Shorts cover inducing an increase in stock price.
- Market rebounds and SIRI goes along with it.
- Synergies begin to pay off sooner than expected.
- New pricing plans attract more listeners and greater content.
- Consumers learn about the impressive lineup of SatRad content and buy subscriptions.
- Advertising revenue picks up as the economy picks up.
I'm looking at SIRI five years down the road, but I think we could be rewarded long before that. SIRI is a highly manipulated stock, and the large amount of short sellers in SIRI make it tough to predict anything, but at forty cents, SIRI is a screaming BUY, in my opinion.
As long as this stock is below a dollar, I'm buying strong.
Celsius Holdings, CSUH.OB, is a risky play, but one that could pay off huge for patient investors.
Celsius is the world's first calorie-burning beverage that comes in five carbonated flavors and two non-carbonated, Green Tea flavors.
The stock has been hammered in both the down market, and, allegedly, buy a large shareholder who has been continuously selling shares, adding to the downward pressure on the stock.
Celsius has, until now, relied almost solely on word-of-mouth advertising, but the future looks more ambitious now that supplement business icon Carl DeSantis has jumped on board.
CEO Steve Haley recently informed investors that an advertising campaign is underway, and we could see TV ads soon after the elections. Radio ads are already in play.
It's my opinion that the next three quarters are crucial for the existence of this company. We need to see more reorders coming in and we need to see real growth due to the large amount of distribution agreements that were announced earlier this year.
Originally, I bought CSUH.OB with a five-year plan in mind, and I have not strayed to far from that thought process, but we can see results a lot sooner than that if the product catches on like I believe it could.
I've bought in the teens, but I've been averaging down at six, five, four and now three cents to bring my average to near seven cents.
This stock, as well as the product, is a real sleeper. Once people find out about the product, they'll find the stock, and we could be in for some real rewards.
Again, CSUH.OB carries risk, but we all know VFC loves risk and he loves reward.
- The company does not have the financial resources to cover operations and goes bust.
- Celsius does not sell as expected and distributors do not reorder the product, leading the company to bankruptcy.
- The slumping economy takes the extra money out of people's pockets that they would be spending on a luxury item such as Celsius.
- The product catches on and an increase of sales leads to an increase in stock price.
- The TV and Radio advertising campaign leads to an increase in sales.
- More international deals are announced, attracting new investors.
- New national deals attract new investors.
- Celsius is bought out by a larger, already established corporation.
Another factor to consider, it seems that every few months we get an unexpected increase in share price, giving the investor an opportunity to sell into the spike and pocket some profit.
With a stock like CSUH.OB, you could be in for some serious rewards, or in for a disappointment if the company goes bust.
I happen to believe we're in for good things once the advertising campaign gains traction.
I'm here with a five year plan, but i'll sell a few shares into any significant spikes. Now that I'm loaded in at the current prices, I'll be holding and keeping a close eye at the numbers for the next few quarters.
GE, General Electric:
GE has been hammered by a combination of bad news and the market conditions.
With a 52-week high of over forty dollars, the stock is currently trading near twenty dollars.
Much of this has to do with the market conditions, but the company has been hit with bad news and reduced profits. Months ago, GE was the victim of rumors that the company was doing business in Iran, and recently, it's financial services division has taken a hit.
What I do like about GE, and gives me confidence in a rebound, are:
One, GE is one of the largest companies in the world, and I don't see it failing.
Two, Warren Buffet has just invested three billion dollars into GE. VFC does not argue with Warren Buffet. 'Nuff said on that one.
- Economy and market kill GE and it's financial services division.
- It's discovered that Warren Buffet was abducted by aliens and forced to invest three billion of his dollars into GE.
- Buffet picks right again.
- GE rebounds when the market and economy rebound.
- GE is somewhat oversold and due for a rebound.
- GE is cash-heavy.
I'm looking at GE to rebound with the economy. I'm not convinced we've seen the bottom with GE, but the company's large cash position give it a nice cushion to the drop.
Although GE should rebound with the market, I'm looking at GE as a long-term investment, accumulating a little bit at a time and looking way down the road.
Dendreon is a favorite of mine, not because of the stock, but because it could be the breakthrough cancer immunotherapy that sets the stage for cancer treatment of the future.
Dendreon just released encouraging interim results for it's IMPACT Phase III trial for Provenge, a prostate cancer treatment, with final results due out next year. Any price below ten dollars is a steal if Provenge ultimately gains approval in the US. With no guarantee that Provenge will be approved, DNDN is highly risky, but could be a stock that rewards investors for life, and, more importanty, rewards patients who suffer from prostate cancer.
DNDN was heavily shorted before the latest news release, and many shorts probably covered after the recent news which pushed the stock to near the seven dollar level. It's likely that new shorts moved in and are riding this stock down into the five dollar range where it sits now. I wouldn't be surprised to see it drop even lower, perhaps into the two dollar range, based on the large amount of shorts and the amount of time that traders can trade the stock before final results of the IMPACT trial are released.
There is news that can influence the stock before then, such as news of a partnership or buyout, but the company has been resistant to both options in the past.
Provenge has demonstrated efficacy, and is proven to be safe, but the FDA has thus far refused to approve the breakthrough immunotherapy.
Start reading here about the long Provenge saga, including such themes as corruption, manipulation and conflict of interest.
Dendreon is also working on a Breast cancer immunotherapy called Nuevenge.
- Provenge fails to meet endpoints and does not meet FDA standards for approval. Stock will sink to below a dollar on this news.
- Provenge is ultimately approved, stock price could soar into the forty or fifty dollar range.
While there is more to the Dendreon pipeline, the future of this company rests on the results of the Proveng trial.