Amarin Is Tomorrow's Monster Stock
Jul 18th 2012 3:49PM
Updated Jul 18th 2012 4:06PM
Stocks climbing to 10 times their original price are rare breeds -- but they're not impossible to find. Especially when you have Fools for friends.
The market's best stocks include companies that have risen dozens of times in value by taking advantage of the market's weaknesses. These aren't penny stocks; they're viable companies with sound business prospects that are achieving phenomenal returns. Finding just one or two of these monstrously successful firms can help you establish a winning portfolio.
Stalking the monster
To find tomorrow's winners, we've enlisted the help of monster-trackers at Motley Fool CAPS who have successfully picked stocks that have doubled, tripled, or even quadrupled in price. This week, All-Star member Momentum21 gives us biotech Amarin (NAS: AMRN) as the next monster pick. This All-Star made a mark by picking Arena Pharmaceuticals to outperform the S&P 500; it surged 579% after that pick.
Of course, you shouldn't jump into the breach just because an All-Star stock picker did. Just consider this a starting point for your own research of extreme buying opportunities.
|Market Cap||$2.0 billion|
|Revenues (TTM)||$0 million|
|1-Year Stock Return||6.2%|
|Return on Equity||NA|
|Dividend & Yield||NA/NA|
|CAPS Rating (out of 5)||****|
Source: Motley Fool CAPS and Finviz.com.
Focusing on the future
The clock is ticking down for an FDA decision on Amarin's fish-oil therapy AMR-101, scheduled to be issued sometime this month. Shares of the biotech have been running much hotter than the 6% year-over-year gains suggest. They've doubled in value in 2012 alone, and with good reason.
It recently was awarded U.S. patent office protection for its formulation, which ought to insulate it from attack when it hits the market, and a smaller rival's late-stage study results couldn't match AMR-101. Not that they were bad, per se, just that they were only on par in effectiveness with GlaxoSmithKline's Lovaza, which is the only prescription-grade omega3 medication currently approved by the FDA. Even though AMR-101 isn't on the market yet, it's already seen as a major upgrade from Lovaza, which is why investors have been bidding up the stock. They're anticipating the FDA will agree.
Treating high triglyceride levels, as AMR-101 seeks to do, is a lucrative market. GSK's Lovaza generated nearly $1 billion in sales in the U.S. last year while Abbott Labs' (NYS: ABT) fenofibrate, which it markets as TriCor and Trilipix, generated some $1.4 billion in revenues in 2011. Of course, Lipitor from Pfizer (NYS: PFE) was perhaps the most successful drug ever, generating $10.7 billion last year but more than $130 billion over its life.
The perfect mixer
The success of Lipitor, in fact, and the resulting generic competition that's now available, is one of the reasons Amarin is seen as a potential takeover candidate. Pfizer could use a successful therapy in the market, and one that now enjoys patent protection, but so could Merck (NYS: MRK) or AstraZeneca (NYS: AZN) , since AMR-101 is compatible with their cholesterol-fighting drugs. Even if management says it doesn't want to get acquired, preferring to remain a stand-alone cardiovascular disease drug developer (a sentiment that actually sent its stock lower), Amarin seems destined to be one of those companies that will get swallowed up anyway.
Right now Amarin doesn't have a product on the market, but the potential for monster growth following FDA approval is almost palpable. CAPS member ennui thinks Amarin could have a blockbuster on its hands: "Just keep this in mind: this is a potential blockbuster drug, which has shown greater efficacy than the current champ. If approved, this formula has multi-billion dollar potential."
I agree there is still plenty of runway for the company and the stock, so I'll be maintaining my own outperform rating on CAPS, but let me know in the comments section below or on the Amarin CAPS page what your opinion of its future is.
A chance for scary growth
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The article Amarin Is Tomorrow's Monster Stock originally appeared on Fool.com.Fool contributor Rich Duprey owns shares of Pfizer, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Abbott Laboratories. Motley Fool newsletter services have recommended buying shares of Pfizer. The Motley Fool has a disclosure policy . We Fools may not 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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