Business Week Gets More & More Speculative (ABX, CBLI, UEC)

February 22, 2008 by Douglas A. McIntyre

Business Week’s "Inside Wall Street" weekly column has been known for moving stocks.  In fact it has been influential enough that people have been busted for insider trading via getting the names ahead of time and front-running the magazine.  This week’s column  looks more speculative than fundamental, which you can see if you go inside the real guts.  Here are the basics:

  • Barrick Gold (NYSE: ABX) was noted positively with the stock being called as "going to $75 in 18 to 24 months" by Schaeffer Research.  This is actually a call on how to play gold going above $1,000… just keep in mind that this is total performance chasing, even though it cites a near 10% pullback as Barrick has doubled in the last year and this is one of the largest pure-plays on gold out there.  Jim Cramer named this one recently as his speculative gold stock for 2008.
  • Cleveland Biolabs (NASDAQ: CBLI) was listed as being able to nearly triple after being cut in half.  Two mostly unknown pundits have spoken positively about it despite the company losing its largest potential Defense Department order for its anti-radiation drug Protectan, which lost out to Osiris Therapeutics (NASDAQ: OSIR).  It lists foreign government contracts, and its potential for oncological hopes in chemotherapy.  This one seems extremely speculative with a $56 million market cap, even if only 2.5-times net book value with essentially zero in real revenues.  This was one that we also recently noted as one of the many biotechs hitting 52-week lows.
  • Lastly noted is Uranium Energy (AMEX: UEC), a volatile speculative stock in the highly volatile uranium sector.  With so many already producing uranium and many being less speculative in a speculative group, this one is noted as having a new mine going into production in 2010.  If you look at our past grouping of uranium calls as the nuclear sector heats and cools, you’ll see why this one is definitely one of the more risky plays out there.  This also recently moved from the OTCBB to Amex, and was one we asked "when is enough finally enough?" in many of the uranium names.

We’ve seen the "Inside Wall Street" column give some great calls before, and we’ve seen it give some duds.  It’s too soon to call these out entirely, but twoout of these three have a real risk at ultimately giving investors a chanceof sitting on a goose egg.

Jon C. Ogg
February 22, 2008