Aug 27, 2010 10:04 AM PDT
Is there money to be made from
stocks that hit a 52-week high? Yes.
52-week highs often set the threshold and support level for a stock. Of course due diligence on moving averages and trends and a fundamental look at the technical and bottom-line are in order, but the momentum a stock gets from hitting a twelve month high can be as psychologically important as: DOW 10,000 2.0 - and 52-week highs often run contrarian to a bearish day in general.
While this morning began in the red in the broad markets, the following three SmallCap companies: BRKS, TRGT and AUDC set 52-week Highs.
Gaining over 10% this morning, S&P SmallCap 600 company Brooks Automation Inc., (BRKS) http://www.brooks.com/ beat its 52-week high of $8.42 set on 10-13-09 by trading as high as $8.72. BRKS quickly passed its average daily trading volume early on in the session.
The Top-Line
BRKS management raised its revenue forecast today for the Company's Q4 on greater-than-expected demand for semiconductor chips and sees the gains continuing into its next quarter. BRKS management said they now expect to report revenue of $64 million for the quarter ended Sept. 30, up 45% from Q3. BRKS previously expected an increase of at least 25 percent. BRKS expects to post another 45% sequential revenue growth for its Q1 ending December 31, which would take it to $92.8 million.
The chip and semiconductor sector has grown dramatically in the third quarter of 09 and globally, there is a 'let's get on with it' sentiment that is fueling product manufacturing and services to chip makers.
I've written on BRKS before and I like this company. BRKS provides automation, and vacuum and instrumentation solutions primarily to the semiconductor manufacturing industry worldwide. BRKS operates in three segments: Automation Systems, Critical Components, and Global Customer Operations. Analysts have set $12 target prices and I think the stock, even with remedial losses, can top that in the short-term as BRKS services are essential to chip production. A good Buy in the 9-12 range.
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BRKS TRGT
Another company setting a 52-week high amongst the bears today is Targacept Inc., (TRGT) http://www.targacept.com/ which picked up over 19% ($3.91) this morning on good news about one of its drugs. TRGT -now trading in the $23.82 range- had a previous high of $22.50 set on 10-07-09. TRGT doubled its average trading volume early in today's session.
TRGT management said today its drug candidate, known as TC-5214, showed "highly statistically significant results" in a Phase II clinical trial. Patients who received TC-5214 along with a dosage of the existing drug citalopram had better outcomes on a rating scale for depression than those who received citalopram with a placebo. The TRGT CEO said the results are an exciting step forward because many patients with major depressive disorder do not respond adequately to existing treatments by themselves.
I've written on TRGT before and thought it a 'Buy'. I based my rational on the number of drugs it has in the clinical pipeline and that a few non-performers would be easily overshadowed by a few winners like TC-5214. As the positive pipeline trials become evident, the stock will only rise. I also have to say that the alliances TRGT has with SmithKline and Glaxo to market and commercialize it products ensure wide exposure and TRGT revenues, if only drawn from a small percentage, will add value to the stock. Buy.
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AUDC
Setting a 52-week high today; gaining over 10% is AudioCodes Ltd. (AUDC) http://www.audiocodes.com/. AUDC is only pennies over its $2.80, 52-week high set on 10-02-09, but I believe it is reaching for $3 and trying to establish a new floor at that price.
When I see a $2.80 stock generating $145 million in trailing twelve month revenues, I know it's a bottom-line balance sheet or an exposure to the market problem that is stunting its value. Both could be factors. It might even be 'extenuating circumstances' that only insiders or market makers are aware of; perhaps all or perhaps none. This is a 'Closely Watch' stock for me. As for Q2 09, AUDC posted revenues of $30.4 million and a net loss of 2 cents a share. For Q3 09, AUDC will announce its results on November 3, after the close of the market.
AUDC management said last week that they are going to focus on simplifying the deployment and installment of IP voice networks. Growth strategy is good; especially if it works. AUDC makes and sells media servers, security gateways, session border controllers, media gateways; and session border controllers, which enable connectivity, policies, and security for real-time sessions.
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