Here are four healthcare/biotech stocks under $5 whose technical and historical indicators tell us that the stocks have reached a "bottom" and appear ready to bounce higher, even as just short term trades. Of the companies which were captured in the scan, some have pending news catalysts or fundamental events which could set the table for such a move. In addition, investors may ask how can we guess that these firms may be ready to bounce higher with any type of certainty. We hedge our bets using advanced charting and market analytics.
By looking for certain mathematical characteristics and filtering for several trending factors on a stock chart, including an analysis of the firm's Weekly Williams %R (both one and two days ago) as well as the Stock's Weekly Relative Strength Index (also for the past two days), and other factors such as Bear Power and Bull Power, technical analysts are able to set and apply various histograms. They also track other specific points on the Moving Average Convergence Divergence of a stock and in the end, come up with a mathematical formula which yields very specific results.
The results of these scans do not take into account broad market activities, news or other factors which may influence a particular stock, but tests which have been performed as well as methods which have been refined can help us predict how investors and traders will react. While no one can predict how any one particular individual will act, crowd psychologists tell us with a high degree of probability how groups will act given a specific set of circumstances. That study and methodology is the basis for some pretty basic predictive market behaviors and even to some extent the actual technical analysis of stocks.
Even if you don't buy it, paper trade and track these stocks and see if the mathematicians, analysts and market monitors who came up with this list were right.
CEL-SCI Corporation (CVM) shares lost value during the recent market sell-off despite releasing important news earlier in the month. As noted by other Seeking Alpha analysts, it appears the development went unnoticed during the negative trending market.
The milestone update about CEL-SCI Phase III clinical trial was actually one of the most important and value creating announcements CEL-SCI has made in a while. While studies have shown that 30% of Phase III trials fail because of safety concerns, CEL-SCI's announced that results of a review by an Independent Data Monitoring Committee "raised no safety concerns" in their Phase III open-label, randomized, controlled, multi-center clinical trial with Multikine. The Committee went on to indicate "no safety signals were found that would call into questions the benefit/risk of continuing the study."
The important take-away is that CVM's Phase III Clinical Trial for Head and Neck Cancer is continuing as scheduled without any surprises. Investors should also realize that in order to conduct a safety trial like this one, a substantial amount of patients have had to be treated, suggesting that the patient population is growing towards its end-point at an effective pace. That has worried some long time investors in the past.
Again, CVM shares here look oversold and undervalued considering this development and we see technical signs that the stock may be ready to move higher. To date CEL-SCI has 36 centers up and running and they expect to add additional centers to bring the total number of centers to about 50. The primary endpoint is a 10% improvement in overall survival. Additional news flow and data should call attention to this low-priced Phase III biotech in the days and weeks ahead.
Shares of Aeterna Zentaris (AEZS) have taken a beating after a busy quarter raising capital. Shares of the company now appear ridiculously undervalued given the simple reason that the firm has more cash in the bank than their shares are worth. As strange as it may seem, the stock is trading at a $50.42M market cap with nearly $48 million in pro forma cash and equivalents. That amount of cash now provides the firm with an ample runway to develop its current pipeline and its next major catalyst should be positive interim analysis data for its lead compound, Perifosine. That event is expected to occur during the first quarter (1Q13).
In addition, AEZS is now on track to begin a pivotal trial in endometrial cancer. Management had filed for a SPA (Special Protocols Assessment) with the FDA and analysts expect this trial to move forward in 1Q13 as well.
Earlier this week, analysts at Maxim reiterated their Buy recommendation and $9 per share price target.
Shares of Pluristem Therapeutics (PSTI) continue to look oversold after an erroneous report published by Bloomberg caused so much damage to share prices that company officials have publicly called for a published correction because "the article is factually inaccurate and misleading."
Last week the company announced that it has initiated a Phase I/II clinical trial to evaluate the safety and efficacy of its Placental Expanded (PLX) cells in the treatment of muscle injury -- a market estimated in the multi-billion dollar range, but the vast overall market sell-off still sees PSTI shares trading at a discount. This is also a cash heavy stock. In fact, Pluristem is armed with $84 Million in Cash and Equivalents and trades with only 57 Million shares outstanding. PSTI shares simply do not appear to be trading where they should be considering that investors are now getting all of the rest of the Pluristem`s pipeline, IP and clinical data and cash reserves for the current share price even as management has been meeting milestones, releasing positive clinical and regulatory news and out-performing other firms in the same space regularly.
Pluristem has also just announced that its full-scale, clinical-to-commercial grade manufacturing facility currently being built in Israel reached a major milestone making the facility ready to produce FDA-quality stem cells. Capacity is huge; product made there will be worth $1 billion to the company.
At any moment, the firm is expecting to hear back from the FDA about an orphan drug status designation that they filed for recently. In addition, an mostly-ignored up listing in Israel next month should cause institutional investors to come in to PSTI with heavy buying pressure like we see in the U.S. when stocks appear on the Russell indexes and have to be acquired in the open market.
In addition, analysts who have issued an $8 price target on the stock continue to believe that Pluristem will be recognized for the game changing work it's doing, not only within its own world of pushing forward in clinical studies, building out manufacturing and choosing the right partners, but also in the larger scientific and clinical landscape, by facilitating the progress of innovative medicine through simple standardization.
Last on our list is BG Medicine (BGMD), a firm that engages in the discovery, development, and commercialization of novel cardiovascular diagnostics to address unmet medical needs. This company has just changed its business model and could be headed higher as a result.
In an earning release last week, BG Medicine, Inc. announced a new commercial strategy to speed the adoption of its cardiovascular diagnostic tests - the BGM Galectin-3 test and the CardioSCORE test. The firm's management team has taken steps to realign BG Medicine as a commercially-focused company, capable of playing a larger role in facilitating the market adoption their innovative cardiovascular diagnostic tests. Together, these actions appear to place BGMD in a much stronger position to control our own destiny anddrive our own commercial success.
On November 15th, company officer Bancel Stephane purchased 100,000 shares for approximately $126,000. Which some observers see as a very bullish bet.
With a current market cap of $23.58M and a partnership with Abott Labs, BG Medicine looks undervalued and oversold. This stock was trading at significantly higher levels earlier this year and could be headed back in that direction now.