Despite the way it feels, not every stock out there is getting hammered. Some stocks are successfully fighting the headwind, such as Santarus, Inc. (NASDAQ:SNTS), Spreadtrum Communications, Inc. (NASDAQ:SPRD), and Ellie Mae Inc. (NYSE:ELLI). Given how well proven they are, investors may want to consider them as potential safe havens for what’s almost certain to be a rocky summer and beginning of fall. Take a look.
To be fair, Spreadtrum Communications, Inc. hasn’t actually cleared its big hurdle yet. But, it’s done everything except that right, setting up a nice rebound opportunity. The last hurdle for SPRD is the horizontal resistance line at $18.44. Besides that, we’ve already seen higher highs and higher lows stemming from a sharp reversal move back in mid-April. A move above $18.50 would also carry the stock above the key 200-day average line (green).
SPRD is a Chinese technology company. Specifically, it makes fabless semiconductors. It’s possible the market just had a hard time believing the trailing P/E of 7.1 and the forward-looking one of 7.6 were legitimate. But, with the time to disprove the results being adequate, and with nobody being able to do so, Spreadtrum Communications is slowly winning its fans back, and rallying as a result.
Most traders who looked at a recent chart of Santarus, Inc. would be intimidated. The stock’s more than doubled since December, and has felt overbought for way too long. Yet, when investors look under the hood of SNTS and see the underlying results, they know the valuation isn’t a problem; the company could justify even more.
SNTS is a biotech company, but unlike most of its smaller counterparts, it’s actually a profitable one. Oh, we’ve seen flip-flops between the red and the black for a couple of years now. But, the forward-looking P/E of 13.6 is a bargain.... and achievable, now that Santarus has reached a critical mass with a successful type 2 diabetes drug. Between growing profits and a strong pipeline, analysts think the company will triple its income between this year and next.
Last but not least, if you thought Santarus was overbought, then take a look at the chart of mortgage loan software company Ellie Mae Inc. ELLI shares are up 166% since January, and haven’t looked back once. Yet, as overdue as the stock seems like it should be for a pullback, this is another case where the rally makes sense, and may not even be done yet.
ELLI isn’t profitable on a trailing basis, but several things have fallen into place within the past few months that make profits very likely this year, and even more so next year. For instance, it was recently awarded a patent for its security management technology. And, it’s managed to grow by continuing to aggregate clients even while the mortgage industry itself is shrinking. Though the projected P/E of 25.8 still feels (and is) frothy, it’s justifying it with projected income growth of between 30% to 40% for the next five years... a pace that’s already in place.