The Unusual Suspects (AA, INTC, JPM, BRK-A, CYCC, GENZ, IMMU, MNKD, QCOM, SWC)
There are many companies that deserved to be on this weekend’s slate of unusual suspects that have key current developments to watch in this coming week. Some are unusual trading activity, some are earnings related, and some are event related. This week’s unusual suspects are Alcoa, Inc. (NYSE: AA), Intel Corporation (NASDAQ: INTC), J.P. Morgan Chase & Co. (NYSE: JPM), Berkshire Hathaway Inc. (NYSE: BRK-A), Cyclacel Pharmaceuticals, Inc. (NASDAQ: CYCC), Genzyme Corp. (NASDAQ: GENZ), Immunomedics Inc. (NASDAQ: IMMU), MannKind Corp. (NASDAQ: MNKD), QUALCOMM Inc. (NASDAQ: QCOM), and Stillwater Mining Co. (NYSE: SWC).
The number of biotech stocks on the list this weekend is one more of coincidence than one of design. We have compiled detailed explanations on each stock story below with an outlook of what to watch for in the coming trading days.
Alcoa, Inc. (NYSE: AA) is on deck for earnings on Monday afternoon as the official unofficial start of earnings season, and it is the first of all the DJIA components this earnings season. Alcoa is expected to return to profitability with earnings of $0.06 EPS and on revenues of $4.82 billion per Thomson Reuters consensus data (whisper numbers are now much higher on earnings). Friday saw highly unusual options trading as it is one of the few reporting earnings before next Friday’s options expiration date. JAN10 $17.50 CALLS traded 34,998 contracts versus a prior open interest of 45,721 contracts and saw 7,969 contracts of the FEB10 $17 CALLS change hands versus an open interest of 15,986 contracts. This closed at $17.02 on Friday versus a 52-week trading range of $4.97 to $17.06.
After Alcoa this week, the other DJIA components reporting earnings are Intel Corporation (NASDAQ: INTC) and J.P. Morgan Chase & Co. (NYSE: JPM) and you can expect earnings previews for both as these get closer. Intel reports this coming Thursday after the closing bell. Jim Cramer has been touting that for a blowout quarter and strong guidance this week in his ‘tech tsunami’ stocks for 2010 to play the growth of the mobile internet. Jamie Dimon and friends over at JPMorgan Chase will report earnings on Friday morning and they have the giant healthcare conference this coming week.
Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) may be cheap on a myriad of fronts, according to a Barron’s article called “The Buffett Paradox” from this weekend, despite it questioning Buffett’s criticism of Kraft Foods, Inc.’s (NYSE: KFT) pursuit of Cadbury plc (NYSE:CBY) versus his own expensive acquisition of Burlington Northern Santa Fe (NYSE: BNI). The new stock issuance and the closure of the Burlington Northern Santa Fe deal discount the stock to an implied forward book value, as well as pressure from arbitrage spread bets keeping pressure on the stock. Intrinsic value post-BNSF may be $125,000.00 and the publication noted the ‘only’ 3% gain in 2009. Even more importantly, Barron’s noted a potential addition into the S&P 500 Index and that would give added index buying.
Cyclacel Pharmaceuticals, Inc. (NASDAQ: CYCC) is the next biotech speculation stock where trophy hunters keep looking for what may be the next 1,000% return. This closed up big at $2.67 on Thursday on huge volume, then gapped up even more pre-market on Friday to $3.23 for a 20% gain. Then it went as high as being up over 35% on Friday, but the problem is that shares closed close to the lows of the trading day at $2.96 on far more shares than it has in its entire float.
Genzyme Corp. (NASDAQ: GENZ) has had issues of its own over manufacturing and other woes for what is becoming too long for most shareholders. But the company had 3 bits of news which are potential game-changers for it. If you are a whale-hunter, Carl Icahn is considering making a proxy fight at the company to nominate his own panel of directors and that will come to a head over the next week or two weeks. The company reached an agreement with an activist investor group called Relational Investors as well this last week over the potential board changes down the road. Furthermore, the other run came from Genzyme hiring a quality control executive named Ron Branning. Branning has major experience as prior companies he has worked for are Gilead Sciences, Genentech, Aventis Behring, Somatogen (Baxter), Genetics Institute (Wyeth), Boehringer Ingelheim, GD Searle (Pfizer), and Johnson & Johnson. Friday was the third consecutive gain and the stock closed up 9.7% this last week.
Immunomedics Inc. (NASDAQ: IMMU) was proof of more ten-bagger hunting for 1,000% hopeful returns as it closed up almost 24% at $4.05. This run-up was also apparently an insatiable appetite for speculators and traders as this news was on a patent allowance, and was one of more than 300 patents it has globally. This might not have even mattered except for the notion that it was over a lupus patent, which had traders thinking about the next Human Genome Sciences, Inc. (NASDAQ: HGSI).
MannKind Corp. (NASDAQ: MNKD) had a mystery drop before the close on Friday and closed down 3.35% at $8.04. Then about an hour after the close on Friday it disclosed what many had expected or feared was coming: the FDA won’t meet the deadline of January 16 of the company’s new drug application review for its Afresa inhalable insulin treatment for diabetes. The good news shares were only down around $7.80 when we last looked at them on Friday evening. You want to watch this one Monday because of huge options activity and a monster short interest.
QUALCOMM Inc. (NASDAQ: QCOM) may have been the unofficial winner of this last week’s Consumer Electronics Show in Las Vegas after shares gained almost 7% this last week. CEO Paul Jacobs touted the Mirasol display technology for eReaders, but the real boost is from the SnapDragon microprocessor that is going into all these new smartphones and now into netbooks and tablets. Shares closed at $49.47 on Friday and hit a new intra-day 52-week high of $49.80. Goldman Sachs was positive on the stock this week.
Stillwater Mining Co. (NYSE: SWC) keeps running up higher and higher as this is a platinum and palladium company. The boom here has been because of the anticipated launch of the new platinum and palladium ETFs yesterday. The thought is that platinum could get a run-up just from the introduction of the platinum ETF as it is a buyer of physical delivery. This closed at $12.80 on Friday, just under its intra-day and new 52-week high of $12.90. This rose from $9.48 the Friday before for a gain of 35%; and the stock is up almost 44% from the Friday just two-weeks ago. We don’t want to call Stillwater by the name holy water nor bong water just yet. But trading volume has been the most active in months and months. This last six session period is the most active in trading that the stock has been since last year when it ran about 40% from mid-May to early June when it had 15 consecutive 1 million-plus shares per day in trading volume.
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JON C. OGG
JANUARY 9, 2010