I follow quite a lot of companies -- some more closely than others -- so the usefulness of a watchlist to me cannot be overstated. Without my watchlist, I'd be unable to keep up on my favorite sectors and what's really moving the market. Even worse, without my watchlist, I'd be lost when it came time to choose what stock I'm buying or shorting next.
What I intend to do as an experiment is to make every Wednesday "Watchlist Wednesday," where I'll discuss three companies that have crossed my radar in the past week and at what point I may consider taking action on these calls with my own money. Keep in mind these aren't concrete buy or sell recommendations, nor do I guarantee I'll take action on the companies being discussed weekly. What I can promise is that you can follow my real-life transactions through my profile, and that I, like everyone else here at The Motley Fool, will continue to hold the integrity of our disclosure policy in the highest regard.
Imperial Sugar (NAS: IPSU)
What a difference a week has made in the lives of Imperial Sugar shareholders! The company, following its first-quarter earnings results, nearly doubled last week after mentioning that it's in late-stage talks with a third-party to purchase its interests in Wholesome Sweeteners. I personally view this holding as Imperial Sugar's only meaningful asset.
A potential sale doesn't change the fact that Imperial lost money yet again this quarter. Yes, a $0.29 loss beats the $0.75 loss it posted in the first quarter of fiscal 2011, but it's another loss nonetheless. Sugar prices have nearly doubled since their March 2009 lows, and those high input costs are continuing to crush Imperial's margins. Outside of a one-time insurance gain in 2010, Imperial hasn't been operationally profitable since 2007 -- and that's a major problem. I stand by my assessment that the company may not survive and may look to take a short position.
True Religion Apparel (NAS: TRLG)
This is one stock that may be able to turn investors' frowns upside down. True Religion reported fourth-quarter results last Thursday that simply didn't live up to recent expectations. Profits fell $0.09 shy of expectations and its 2012 forecast highlighted EPS growth of only 4% to 7%. With many on Wall Street misunderstanding the reason for the weakness, now might be the perfect time to buy.
True Religion has been transitioning from a wholesale to a brick-and-mortar business model for years because it's a higher-margin space that leaves the company less reliant on large retailers that have fickle spending habits. I don't see wholesale segment weakness as a reason to sell the stock. Nor do I feel that recent weakness in rival Abercrombie & Fitch (NYS: ANF) created by excess discounting to move unwanted merchandise will carry over to True Religion. The company has had no trouble selling its goods at full price in its brick-and-mortar locations. With True Religion carrying $8 in cash per share and no debt, I may look to purchase shares in this premium denim brand sooner rather than later.
Regeneron Pharmaceuticals (NAS: REGN)
Regeneron shareholders have had an impressive week thus far, with their stock up handsomely following the company raising its fiscal 2012 sales forecast for its wet macular degeneration treatment Eylea. The drug was originally forecast to bring in $140 million to $160 million, but Regeneron essentially doubled its forecast to $250 million to $300 million. Yet even if Regeneron reaches the top end of this sales range, I find a $10 billion valuation very hard to justify.
The company didn't speak to where the extra Eylea demand is coming from. The drug does have a pricing advantage over Roche's (OTC: RHHBY) Lucentis as well as the convenience factor of only needing to be given once every other month -- Lucentis is administered once a month. Roche's Avastin is really the fly in the ointment. While it's not officially approved as a treatment for macular degeneration, Avastin's low cost often coerces doctors into prescribing it. I feel it's too early to call Eylea a success here and may look to buy puts on Regeneron.
Is my bullishness or bearishness misplaced? Share your thoughts in the comments section below and consider following my cue by adding these three companies to your free and personalized watchlist to keep up on the latest news with each company.
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- Add Imperial Sugar to My Watchlist.
- Add True Religion Apparel to My Watchlist.
- Add Regeneron Pharmaceuticals to My Watchlist.
At the time this article was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He's a total nerd when it comes to making lists. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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 that believes transparency comes first.
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