Foolish investors always take a long-term time horizon when approaching their investments. That doesn't mean, however, that short-term gyrations can be ignored, especially when they involve large price swings.
The five companies listed below have posted huge gains in the first three weeks of 2012. Read on for some detailed explanations of their success, as well as what you should expect moving forward. Read to the end and you can gain access to a special free report on The Motley Fool's top stock for 2012.
Main Product Offering
|Dendreon (NAS: DNDN)||Provenge, a prostate-cancer drug|
|SodaStream (NAS: SODA)||At-home soda makers|
|Avanir Pharmaceuticals (NAS: AVNR)||Nuedexta, a drug for the treatment of pseudobulbar affect|
|Dangdang (NYS: DANG)||An e-tail hub: It's "the Amazon.com of China."|
|KV Pharmaceutical (NYS: KV.A)||Makena, a drug to prevent premature births|
If you really want to be impressed, take a look at how these five companies have done since the turn of the new year. An investment of $1,000 split evenly among these five companies would be worth $1,488.34 as of yesterday's close -- an incredible return in just three weeks' time.
Last year was not a kind one for Dendreon. After winning approval for Provenge -- its revolutionary prostate-cancer drug -- the company wasn't able to meet demand for its product. Then, alas, once production had ramped up, demand had weakened, and the company was left with egg on its face.
But just after the new year, Dendreon came out with an operational update stating that Provenge sales were tripling, and the stock has been soaring ever since. Besides the promise that Provenge holds for the company, Fool analyst David Williamson thinks the company is an attractive buyout candidate.
- Add Dendreon to My Watchlist.
Fool analyst Rick Munarriz was genuinely confused as to why SodaStream hadn't done better in 2011. Apparently, blowing past analyst estimates, showing impressive growth, and further disproving the notion that at-home soda making is just a fad weren't enough to convince investors that this stock was for real.
It looks like a tipping point was reached early this year when the company announced a partnership with Kraft. Under the terms of the agreement, Crystal Light and Country Time Lemonade will soon be coming to SodaStream machines near you. Looking ahead all the way to 2015, Rick is still very bullish on the stock.
- Add SodaStream International to My Watchlist.
Avanir's Nuedexta treats an interesting ailment: uncontrollable laughing or crying. Investors weren't sure which to do in 2011, as their wonder drug gained approval in late 2010, only to see demand for refills slumping after it was released into the market.
This year has been much kinder to the company, with shares up 40%. It's tough to say, though, exactly why there's been such a jump. My best guess: Investors were heavily shorting the stock -- at approximately 20% of the float -- and the covering of those shorts is creating a squeeze. I'd wait and see what the latest prescription numbers look like before diving in.
- Add Avanir Pharmaceuticals to My Watchlist.
The Chinese e-tailer also had a rough 2011, falling precipitously from its post-IPO highs. Back-to-back quarterly reports showing wider-than-expected losses had many investors losing faith. That would help explain why more than 18% of its float was being sold short by the end of the year.
But hope springs eternal for Dangdang investors. Though there was no specific news that helped rocket the company forward, the sheer size of the opportunity sitting in front of the company -- along with the potential for a short squeeze -- has sent shares up over 64%. Be careful with this stock, it can be extremely volatile!
- Add E-Commerce China Dangdang to My Watchlist.
Ah yes, KV -- I wrote about this company for our 2011 year-in-review. The company's drug, Makena, is the best-in-class option for preventing preterm births. The problem: Management decided to price the drug way out of range for most patients.
Fool analyst Sean Williams said that if the company wants to succeed this year, "establishing methods that make Makena more affordable and accessible to the public, along with bettering its public image, are paramount to its success." He forgot to mention that when other companies' alternatives don't work -- as was the case with Columbia Labs/Watson Pharma's preterm birth gel -- that too could be a boon for the company. Time will tell how long that pop will last.
- Add KV Pharmaceutical to My Watchlist.
All five of these stocks have performed admirably well so far in 2012, but none of them were crowned The Motley Fool's Top Stock for 2012. To find out which company did receive that honor, get a copy of our latest special free report today, absolutely free of charge!
At the time this article was published Fool contributor Brian Stoffel owns shares of Amazon.com. You can follow him on Twitter at @TMFStoffel.The Motley Fool owns shares of Amazon.com and Dendreon. Motley Fool newsletter services have recommended buying shares of SodaStream International and Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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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