Trends, Charts and Exclusive Opinion
Three Very Different Companies Exit March as Lions
CIGX: Modified Risk Tobacco Product Ariva has a Future
FRED: 2010 earnings Expected at 68 cents to 75 cents per share
ARRY: Amgen Partner has a Very, Very Impressive Pipeline
First up this morning is Star Scientific Inc., (CIGX) http://www.starscientific.com/ currently trading in the $2.67 range. CIGX was trading between $4 and $5 a year ago before it plunged in June of 09 to $1. CIGX kept a one dollar floor for 8-Months until it rallied this month taking it back into the $3 level. CIGX has a 52-week high of $5.89 set on 05-29-09 with current trailing twelve month revenues of $728+ million. CIGX is a near-term (3 Mo) ‘Buy’ consideration for me. It is priced at less than half its high and has a rally going on. There are a few more shorters of the stock than I like, but I don’t belive that there is enough downward pressure to hold back the stocks current climb.
Last month, CIGX filed an application with the FDA for approval to market as a “modified risk” tobacco product under the Family Smoking Prevention and Tobacco Control Act of 2009. This submission is the first such application to be filed with the Tobacco Products Center of the FDA, which has been established to oversee all aspects of tobacco regulation outlined in the 2009 Act.
Ariva is a dissolvable tobacco lozenge with wintergreen flavoring, is made with flue-cured tobacco that contains levels of tobacco-specific nitrosamines (TSNAs) that are below detectable limits by most current standards of measure. TSNAs have been identified in scientific literature since the early 1950s as one of the most deadly and abundant groups of carcinogens in tobacco and its smoke. CIGX makes, sells, and licenses tobacco curing technology that prevents the formation of carcinogenic toxins present in tobacco and tobacco smoke, primarily the tobacco-specific nitrosamines (TSNA).
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Next up this morning is S&P SmallCap 600 company Fred’s Inc., (FRED) http://www.fredsinc.com/ currently trading in the $12.50 range on a 3-Month average daily trading volume of 318,329 shares. FRED was trading in the $12 to $14 range a year ago. FRED in essence kept that level for 7-Months until early-Nov 09 when it began to dip. The stock nose-dived down to $9, bounced back to $10.50, and then headed down to $9 again. In early Feb 2010, FRED began a rally that has taken it into its current range. FRED has a 52-week high of $14.85 set on 06-02-09. FRED has trailing twelve month revenues of $1.78 billion with a positive, corresponding diluted EPS of $0.50. That’s why FRED is a long-term (1 Yr) ‘Buy’ for me; it returned earnings to shareholders during a simply awful chapter in the history of retail. I believe it will regain its high within a year.
Last week, FRED reported that its Q4 profit more than doubled (absent some charges that weighed on the prior-year period). Net income jumped to $5.7 million, or 15 cents per share vs. $2.3 million, or 6 cents per share, a year earlier. Revenue for the three months ended Jan. 30 rose 1% to $473.1 million from $469.4 million. Full-year profit surged 42 percent to $23.5 million, or 60 cents per share, from $16.6 million, or 42 cents per share, in the previous year. FRED management expects 2010 earnings of 68 cents to 75 cents per share. For the first quarter, the company predicts a profit of 15 cents to 20 cents per share, with sales up 1% to 3%. FRED operates 669 discount general merchandise stores, which included 24 franchised Fred's stores at year's end.
Finally this morning is Array BioPharma Inc., (ARRY) http://www.arraybiopharma.com/ currently trading in the $2.80 range on a 3-Month average daily trading volume of 358,265 shares. ARRY was trading in the $2.50 range a year ago and it sat in the $3 level through most of the summer of 09 before it spiked up in Aug past $4.50. ARRY slipped downward in Sept and by late-Oct was in the $1.75 range. In early-Dec it rose back up to the $2.50 to $3 level. ARRY has a 52-week high of $4.65 set on 08-11-09. ARRY recently reported a 25% revenue jump for its Q2 2010 and a loss on the quarter of 44 cents a share, beating analysts’ expectations of a 55-cent loss. It lost 79 cents in Q2 2009. Things are getting better.
ARRY is a short-term (6 Mo) ‘Buy’ consideration for me. “We are delighted to partner with Amgen on our type 2 diabetes program, including AMG 151 / ARRY-403, which provided a $60 million up-front payment with additional potential milestones of $666 million and a double-digit royalty,” said Robert E. Conway, Chief Executive Officer. ARRY has a very, very impressive drug pipeline that focuses on small molecule drugs to treat patients with cancer, inflammatory, and metabolic diseases.
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