Yesterday, the Dow Jones Industrial Average fell 102 points, starting off the week on the wrong foot as European fiscal concerns and further proof of a cooling Chinese economy worried everyone from the start. While the following stocks strapped on rocket packs and went even higher, resist the urge to high-five everyone in the cubicles next to you. Smart investors won't celebrate until they know why their stock surged. Without a fundamental basis for the bounce, these stocks can quickly make the return trip down.
Not dead yet
Left for dead earlier this month after an experimental colorectal cancer drug failed to meet its primary endpoint, Keryx Biopharmaceuticals (NAS: KERX) saw some life flow through its veins again as its other therapy, Zerenex, a treatment for patients with end-stage renal disease who suffer from elevated phosphate levels, reported positive results in Japan. Keryx has been looking to improve upon a similar treatment developed by Sanofi's (NYS: SNY) Genzyme division, and its Japanese partners want to file a marketing plan there later on this year.
While that sounds hopeful, the opportunity for Zerenex is nowhere near what the market potential was for perifosine, as anemia treatments offer a total share of around $750 million in the United States. And with Sanofi's Renagel going off-patent in 2014, there will be a lot more competition to fend off. As we saw with perifosine, nothing's guaranteed till the ink is dry on the approvals.
Add Keryx to the Fool's free portfolio tracker, and tell me in the comments section below or on the Keryx Biopharmaceuticals CAPS page whether you think this biotech isn't just some zombie that doesn't realize it's dead.
Book 'em, Danno!
Well, I couldn't have picked a worse time to close out my outperform rating on CAPS for bookseller Barnes & Noble (NYS: BKS) . Two weeks ago, in the wake of an e-book publisher settlement, I essentially said the deal gave the market to Amazon.com (NAS: AMZN) because with its breadth of offerings, it could afford to lose money on its e-books and make it up elsewhere. Barnes & Noble, with its costly bricks-and-mortar footprint, didn't have the leverage that Amazon and Apple (NAS: AAPL) enjoy.
Apparently I'm the only one who saw it that way, because the stock has gone up 22% since then, and hedge fund operator Jana Partners just announced that it's taking a 14% stake in the bookstore chain. My colleague Rick Munarriz thinks Jana's lost its mind, and it's hard to argue with the outlook that Barnes & Noble won't soon join Borders in the remainders bin of bankruptcy.
However, as I also noted last time, my nostalgic hope to continue to stand among the stacks remains strong, and while Rick says for every e-reader Nook Barnes & Noble sells it's cannibalizing its bookstores, I'll point out there can be something to be said for the dual-format strategy. I don't own a Nook -- or a Kindle for that matter -- but I do download books via apps to my laptop and mobile phone, and I still shop at B&N's local store. Of course, the wrinkle to that theory is that my e-reader app is the Kindle version.
I won't go so far as to say this is a dead-cat bounce B&N is enjoying here, but I'm going to also refrain from weighing in on CAPS again, since I'm not sure it can outlast Amazon's dominance.
The broader CAPS community has tilted away from thinking the chain can beat the market, while the All-Stars long ago gave up hope, with 60% of those rating it believing it will underperform. Let us know on the Barnes & Noble CAPS page if you think Jana knows what it's doing, and add the bookseller to your watchlist to be notified if this is a new chapter in its storied life.
Going into orbit
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At the time this article was published Fool contributor Rich Duprey owns shares of Apple, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Amazon.com and Apple. Motley Fool newsletter services have recommended buying shares of Amazon.com and Apple, creating a bull call spread position in Apple, and writing puts on Barnes & Noble. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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