Slowly but Surely Climbing Up the Hill: AEZS, CBAK, PPHM

The following three companies, AEterna Zentaris Inc (USA) (NASDAQ: AEZS), China BAK Battery Inc (NASDAQ: CBAK), and Peregrine Pharmaceuticals Inc (NASDAQ: PPHM) are all very different in their endeavors; but one thing they share in common is a slow, steady march towards higher valuation…

AEterna Zentaris is a Canadian biotech company which has been climbing the hill of valuation for a long time: the stock was at $1.20 in early November of ’10. The shares are currently trading in the $2.31 range, an eight month gain of 92.5%. What caught my eye about this stock wasn’t its ‘long haul’ upward, but its recent strength of support when bouncing back from a dip. For example the shares were trading in the $2.60 range at the beginning of June and dropped to $2.10 by the middle of the month, a loss of 19%, and then they bounced back to their current price, a gain of 10% in a show of strength. I like this stock because its shareholders support. And it also has ‘important’ drugs in its trials pipeline. Simple as that. The short/float percentage is normal and in June Oppenheimer initiated coverage with an ‘outperform’ the market and a $5.50 target.  

China BAK Battery, the industrial electrical equipment maker, has quite a different story: the shares started falling in late April from the $1.80 range until they found their multiple ‘bottoms’ at 90 cents in June. The bottom set as a resistance level, the shares have begun climbing back up the hill: the stock is currently $1.10 and has some upward momentum. There are virtually no short sellers to prevent this stock from keeping its momentum and some good news, from a fundamental point of view; the Company passed the muster of a Samsung audit last month. If management can get a grip on sales and earnings; the stock could retake some higher levels lost in its spring slide.

Not to be left behind, Peregrine Pharmaceuticals has been climbing the valuation hill since early June when it bottomed out on a dip. The stock was trading in the $2.60 range in early April, and then slowly drifted down to $1.70 by early June, a loss of 34%. The turnaround came on new buyers attracted to the attractive ‘entry level’ price and current shareholders aggregating. The stock is currently trading in the $1.98 range, a rebound gain of 16.4%, and it appears the bounce back has legs and will continue. Good. The Company also has ‘important’ drugs in the pipeline and if, once again, management can get its sales and EPS in hand could pick up that 62 cents in the near-term (3 mos) and retake that April price level.

I haven’t, don’t, and do not intend on holding any of the companies mentioned in this article.