At the conclusion of each week, VFC's Stock House examines some news items, stocks and stories that made headlines during the previous trading week, but may also make headlines or influence trends during the upcoming week as well.
The trading year of 2013 kicks off in a big way this week. Although the markets rallied for the first couple of weeks of the year, the noted price and mood fluctuations were based mainly on political factors, rather than on factors inherent to the markets themselves. For example, a resolution to the fiscal cliff mess sparked more certainty than we'd seen for quite some time, while pessimism over the pending expiration of the US debt ceiling set in quickly and stalled the early-year run. Renewed headlines of Europe's economic woes and expectations of another lackluster earnings season also didn't help keep the rally going, but with a slew of economic data due this week and with earnings entering the 'full swing' phase after a couple of 'teaser' reports last week by Alcoa (AA) and Wells Fargo and Company (WFC). One way or another, things ought to get pretty exciting this week.
To gauge the health of the recovery, investors can digest this week retail sales numbers, housing starts data and consumer sentiment, in addition to some manufacturing data. Earnings are likely to steal the overall spotlight, but any improvements - or not - in these data over the previous month or quarter can move the markets, too, especially if the data supports any trend set by the earnings reports.
One item that can be put to rest is the silly talk surrounding this trillion-dollar coin that was so talked about over the last couple of weeks. The amount of attention paid that coin served as a steady sideshow to real news, and was a testament to the lack of any relevant discussion going on in the meantime. That will all change this week.
Plenty of action this week expected, but there's still always room for a few individual stocks and stories to keep an eye on...here are just a few of them...
Big Bank Reports Will Dominate
Alcoa kicked off the season last week on a high note, as previously discussed, and Wells Fargo followed with a worthy follow-up. Wells reported record profits, although some were concerned that the bank wrote fewer mortgages than it did during the previous quarter. Shares traded relatively flat following the report, closing down by less than a percentage point on Friday, but provided a solid introduction to a banking-heavy week with giants such as Bank of America (BAC), Citigroup (C), Goldman Sachs (GS) and JP Morgan (JPM) all slated to report. Those looking for early-year trends to assess the health of the banking industry at the offset of 2013 will find themselves with ample data and earnings to pore through this week, and any encouraging trend in the sector could spark a broad-based rally, especially if other reports from the likes of General Electric (GE), Intel (INTC) and eBay (EBAY) make positive waves themselves and validate a healthy rebound based on growing consumer demand. Bear in mind that profits is not enough to spark general excitement, as evidenced by the Wells report and the subsequent lull in share price movement; it's evidence of a healthy overall economy that investors are watching for, so it may be worth looking deeper than the headlines.
Cutbacks And A Downgrade Thrust Earnings Into Spotlight
A couple of items from last week could temper the mood surrounding the banking industry leading into the new trading week. Morgan Stanley (MS) announced last week that it expected to initiate another round of cost-cutting measures, which would include the laying off 1600 personnel from its securities unit. The move is a sign of the times that large businesses, banks and corporations may not be finished with the restructuring that has been underway since the economic collapse of 2008-09. That said, investors should not panic looking ahead as many other big players in the industry, including Citigroup, Bank of America and Credit Suisse Group (CS) all undertook similar measures. Also last week - and potentially playing a factor this week - Credit Suisse downgraded Bank of America from 'Outperform' to 'Neutral' and sparked a five percent price dive for BAC. These situations always make me laugh, as if there is no conflict of interest when one big bank covers another and sends shares either spiking or diving. The timing of the downgrade comes curious, too, just before earnings, making the BAC report one to watch.
Investors playing the longer term potential of the sector may enjoy short term dips that materialize from any negative news developments, such as the BAC downgrade, and more of the story will be told with the flurry of banking reports this week. Again, for those looking to play the overall sector, the Financial Sector SPDR ETF (XLF), or other electronically-traded funds, offer investors that opportunity.
Anticipation Of BlackBerry 10 Drives RIMM Shares Higher
Shares of Research In Motion (RIMM) were on the fly this past Friday - jumping by nearly fourteen percent - and should be another hot one to watch this week, too, as investors anticipate the pending launch of the BlackBerry 10 platform later this month. RIMM shares have been highly volatile of late leading into the launch period and have more than doubled off their 52-week lows as investors speculate on a turnaround. Because it can - and has - been argued that consumers may have reached the point of saturation with Apple's (AAPL) iPhone, the avenue may be clear for RIM to start gaining back some of the market share lost with the rise of the iPhone, Galaxy and other recent innovators of the sector. Some popular financial media outlets have also covered the RIMM story as a potential bullish mover, which could help fuel a continued move higher after last week's run. It's been a period of consolidation for this stock after its quick double a few months ago and the company could turn into one of 2013's solid turnaround stories - assuming a successful BlackBerry 10 launch, of course.
TrovaGene Jumps Through Eight Bucks
We've followed the TrovaGene Inc (TROV) story as shares returned more than a triple since the summer months and another milestone was met last week as a significant boost in volume pushed TROV through the eight dollar mark while also setting a new 52-week high. Volume on Friday registered at more than five times the daily average and the price jump made the stock well more than a quadruple off its 2-week lows. Fuelling this company's price run has been the pending commercialization of some of the company's numerous diagnostic tests that can detect various cancer indications through a simple urine sample. The first such test is slated to hit the market later this month and will be able to detect KRAS mutations through urine samples, with others expected to follow in achieving this significant milestone. Aside from the pipeline developments alone, TrovaGene also received attention from some high-profile collaborative efforts and was also highlighted in a recent analyst report when Aegis Capital jumped on board and initiated coverage of the company with a rating of 'Buy.' Continuing a swift move higher, TROV will again be a stock to watch this week. Only twice in 2012 did trading volume hit as high as it did on Friday, a potential sign that more serious investors are moving in. Bear in mind that quick-movers such as this one - which have returned huge gains over a short period of time - are also to be watched for pullback periods of consolidation. TROV has already seen a couple of these on the way up, but pending developments - thus far - have been able to fuel a higher run. It also helps that TrovaGene is capitalizing on the growing healthcare trend of exploiting less-invasive and less-expensive means of identifying and treating various cancers and disease types. Another hot one to watch this week.
Dendreon Spikes Twenty Percent
Dendreon (DNDN) was another of Friday's hot movers, with shares spiking by over a dollar on a twenty percent rise. Having already been identified as a potential rebound play for 2013 due to a reversal in trend for Provenge sales, partly the result of expanded insurance coverage by players such as Aetna (AET), Dendreon then received a boost last week from a Bernstein analyst who upgraded the DNDN stock to 'Outperform' while also upping the price target to $10 from $7. According to reports, the upgrade was based on feedback from urologists, but the company itself may also be benefiting from the implementation of numerous rounds of cost-cutting measures that have helped to sure-up the bottom line as the sales and management team worked to reverse what was - for at least a quarter - slowing Provenge sales. Provenge could continue to grow support from doctors and insurers if data continues to prove its worth in combination with other drugs and therapies, such as Medivation's (MDVN) Xtandi, Sanofi's (SNY) Jevtana, and Johnson & Johnson's (JNJ) Zytiga, for example, which are for the time being solely looked at as competition. Given Friday's boost on huge volume - five times above the daily norm - DNDN will be a hot one to watch again. Analsyts jumping on board the DNDN turnaround train validates what many longs have predicted for some time.
Healthcare, Biotech, Pharmaceutical:
Organovo Holdings Pushes The Four Dollar Mark
Organovo Holdings (ONVO) is another one that we've followed as its shares have returned a quick double in just a couple of months time. Fueling this price run may have been the increasing amount of attention paid to the 3D printing sector, but Organovo has also landed some high-profile partnerships for its own version of the technology that has added a large amount of validation to the company's future. Organovo has applied the 3D printing concept to the field of healthcare and biotechnology by developing the NovoGen MMX Bioprinter, which uses live human cell samples to generate 3D "bioprints" of human tissue that can then be used as disease models and enhance therapeutic drug discovery and development. The potential of this technology over the short to mid term is significant, as mentioned above, in the realm of therapeutic research and development, but looking further on down the road Organovo could potentially put this technology to use in generating organs for patients awaiting transplants, as previously discussed. That specific potential was highlighted by The Economist magazine a couple of years ago while other high-profile coverage from CNBC validated ONVO's potential more recently. In regards to partnerships, Organovo already has standing deals with Pfizer (PFE) and United Therapeutics (UTHR) and just recently agreed to a deal with Autodesk Inc (ADSK) to develop 3D bioprinting software.
After pushing to just below the four dollar mark on huge volume last week, shares looked to have again consolidated in the low threes. Given the potential of the 3D printing sector to usher in the next generation of printing technologies - and specifically the potential Organovo to play a huge role in the bioprinting arena - ONVO remains a hot one to watch. As previously described when 3D Systems Corp (DDD) was moving big, ONVO is an example of how speculative investors can benefit from holding onto a smaller, lesser-known company when the sector itself is starting to run - potential aside.
Volume Spike Draws Eyes To Inovio
Inovio Pharmaceuticals (INO) shares have been in the spotlight during the early-goings of 2013 and are positioned to remain there as America's flu season continues to make headlines. This year's flu outbreak has already hit well more than the majority of all fifty states and is expected to get worse as the season progresses. As discussed earlier in the year, this development is likely to draw attention to companies with flu vaccines in development and Inovio has already gained early acclaim for its clinical-stage universal flu vaccine technology. When such flu outbreaks occur - remember the swine flu - it's not unusual to see the share prices of these developmental flu vaccine companies run, based not only on the potential that the vaccine holds in itself, but because the government also steps in with grant money to hasten the development of a potential vaccine. Investing in a company based on the potential for a short term trade to materialize on such developments is highly speculative, but the percentage gains that can be had with such moves are often significant. Another benefit, though, is that attention can be drawn to pipelines that may otherwise be flying below the radar. Inovio may be benefiting from both scenarios right now. Already this year INO has traded for prices roughly twenty five percent higher then where they began the year as volume moved in heavy last week to support the move. This trading action will again have the stock as a hot one to watch moving into the new trading week.
Inovio's pipeline, including the universal flu vaccine, is based on its proprietary SynCon technology. SynCon is a platform from which the company has developed numerous synthetic vaccines intended to treat numerous infectious diseases and cancer types and Inovio has already successfully attracted a few collaborative efforts, as six of these programs in development are funded by third parties. Three are in the Phase II stages of development. Inovio may benefit this year from its evolution from a 'Phase II' play to a pure late-stage developmental play, as the three pipeline programs in Phase II will reach the latter stages of that milestone mark as the year progresses. Investors often take note that Phase II pipelines are still considered years away from market, but some of the most impressive investment gains in the biotech/small pharma sector are had when successful Phase II and/or Phase III trials are announced. Even considering the recent run, INO is still trading at relatively speculative levels and could attract the interest of those looking to play future catalysts or simply hold for the future as this deep pipeline develops.
Still one to keep an eye on.
Amarin Corporation (AMRN): Hardly a week will go by without AMRN making the list of hot stocks to watch, especially with the launch of Vascepa pending for the very near term, as confirmed by a company presentation at last week's JP Morgan Healthcare conference in San Franciso. Although some of the AMRN trading action may have indicated that the shorts have started to cover during the opening days of 2013, the stock still carries a heavy short interest - which indicates that there is still an ample supply of non-believers, but it could also lead to a more protracted spike, should any positive news develop. As has been the case for months, investors are still waiting for news on Vascepa's New Chemical Entity (NCE) status. A decision from the FDA in that regards will likely provide a catalyst - either up or down, depending on the outcome - for the AMRN and may also be the precursor needed to finalize any potential buyout or partnership offers that may have been previously entertained.
Of note on the news front last week, the company announced the issuance of another MARINE-related patent, which led to a modest three percent share price gain. Still one to watch with the Vascepa launch pending, as a hot start on the market will be crucial for those looking to hold off the short interest.
Facebook (FB): With a push to over thirty bucks achieved last week, Facebook is once again in the good graces of investors. Late-year expirations of share lock-ups did little to spark the rounds of selling seen in such scenarios earlier in the year, as indications are that investors are holding on to those shares in anticipation of future earnings. Facebook's last report noted some positive trends in mobile growth for the company and investors will be keeping a keen eye for a continuation of that trend with this quarter's report. The move to thirty again serves as a nice milestone to open the new year, but the pending quarterly report will provide the near-term catalyst, one way or another. It's also worth considering that although those holding the locked-up shares did not sell at lower levels last year, that's not to say that they won't at higher prices this year.
FuelCell Energy (FCEL): FCEL shares jumped another three percent on Friday on high volume, continuing a run that has returned more than a thirty percent gain in just the opening weeks of the new year. No news was released in conjunction with last week's move, but investors have been encouraged by recent developments on the business front - notably the deal with Dominion Resources (D) to develop the largest fuel cell power project in North America - and by a modest insider buy last week. The recent move higher on large volume, the significant short interest and the company's positioning for the future will keep this stock as one to watch for the week.
Titan Pharmaceuticals (TTNP): After hovering for the better part of a year at levels nearly a third of the current share price, Titan started making noise late last year when the company landed a partner for Probuphine, a subcutaneous treatment for opioid addiction that is also being investigated for use in treating chronic pain. In December it was noted that a push towards two bucks may materialize as we awaiting an approval decision for Probuphine, especially with partnership news in the rear view mirror, and that move has taken shape during the opening week of 2013 as Titan closed Friday at $1.73. Apple Tree Partners, with whom Titan partnered, has a history in the sector of developing and then selling developmental companies such as TTNP, adding to the speculation that 2013 could turn into a pivotal year validation for the small company. The quick gains returned to TTNP investors over the past couple of months are minimal when compared to the run from a penny to over two dollars of a couple of years ago, but a clean triple is nothing to complain about. Titan's push higher last week and the pending FDA decision still has this one as a story to watch.
Roundup: Some less-than-appealing economic news from Europe did little to keep investors at bay on Monday as world markets pushed higher, positioning US markets to follow suit, barring any negative developments before the market open. Investors may also enjoy the encouraging forecasts regarding the US economy over the next couple of years that were making headlines during the morning hours, but it won't be long before earnings numbers and new data start trumping all else on the market wires. It should be an exciting week ahead for investors and traders alike - and we can all be thankful that talk of the trillion dollar coin has finally been put to rest. That plan had as much chance of coming to fruition as RG III's knee has at ever lasting a full season again.
Disclosure: Long FCEL, INO, AMRN, GE.
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