In November, I started "4 Stocks to Double in 2014" and followed that up with two more articles bringing my total to 12 stocks that could potentially double in 2014. To date, the results have been respectable with all but one stock being positive and all stocks having been positive since my recommendations. After further due diligence, I believe that 3 of the stocks could potentially triple from both my initiation and today's date. The upside far outweighs the negatives on these three speculative movers.
Here's a list of the 12 stocks to double and how they've performed since my initiations.
Origin Agritech (SEED):
Price Target $7.00:
Founded in 1997 and headquartered in Beijing, Origin Agritech is China's leading agricultural biotechnology company. Over the years, Origin Agritech has established a robust biotechnology seed pipeline.
Reasons to be Bullish on Origin Agritech Limited:
Institutional Buying: Institutional accumulation had been foreseen in the shares of Origin Agritech post a 15 million share trading week back in early January. The latest filings on February 15th (showing the holdings as of December 31st, 2013) showed that Goldman Sachs (GS) became a new shareholder purchasing 83,000 shares. Since the large volume occurred in the first week of January we do not know if it was Goldman Sachs buying, but it would be very explosive if it had increased its position this quarter. In addition, Prescott Group Capital increased its stake by 74,000 shares to 280,000 shares. I believe the updated institutional holders list (released May 15th, 2014) will show many new additions and I'll be watching to see if Goldman Sachs added even more shares.
Accumulation: Origin Agritech has only 22.9 million shares outstanding and approximately 14.23 million shares in the float. In 2010 when Origin Agritech hit $15 on tremendous volume, Fidelity accumulated 3 million shares (13% of the company) prior to the move. I'll be watching to see if Goldman Sachs is the Fidelity this time around.
Valuation: Origin Agritech has a $51 million market capitalization and trades at 0.72 times sales. It traded at 4 times revenues in 2010-2011.
Buyback: The company implemented a $5 million dollar buyback and has accumulated approximately 365,000 shares to date. I believe that in the quarter ending December 31, 2013 the company could have doubled that number as the shares traded at the $1.50 level for most of the quarter which seemed like the executing price of the first 365,000 shares.
US Companies Entering China: Origin Agritech recently hired Larry K. Cordell as a board of director. Mr. Cordell served as Chairman, President and CEO at UAP Holdings when the company was acquired by Agrium Inc. He has an extensive agriculture background which should bode well in forming new exciting partnerships with global agricultural companies wanting to participate in the Chinese markets. Origin Agritech's phytase corn was the first transgenic corn to receive the Bio-Safety Certificate from China's Ministry of Agriculture. The company has a stronghold in China which bodes well when large US companies like Monsanto or Mosaic wants to expand throughout China.
Catalysts to look forward to in 2014:
Chinese Government Approval: Four commercial hybrids with phytase traits have completed the variety production test and are pending the variety approval from the Chinese government. If any one of these four hybrids gets final approval the shares would more than triple from the $2.20 level it trades at today, we saw similar action in 2010 when it hit $15 per share.
Phase 5 Safety Certification: One GM glyphosate tolerance event (the unique DNA recombination event that took place in one plant cell) passed Phase 4 - Production Test and is waiting for the Phase 5 Safety Certificate. Phase 5 is the final stage and this approval would have the same effect as the first catalyst.
Institutional Buying: I see the large volume as a sign that a large fund could be in the process of buying over 10% of the company, this could create a buying frenzy from both institutional and retail investors following smart money.
China Back In Favor: I believe that Chinese stocks have come back en vogue creating a tsunami of funds that could come into the shares of Origin Agritech. This could provide a technical explosion to the shares at any moment or on significant news.
Sell Side Coverage: We could see sell side coverage on Origin Agritech as Chinese stocks and agricultural names come back into mainstream trader's hands.
Origin Agritech has built a long two year base and it is currently in a triangle pattern. A breakout to the upside on the back of its lengthy base should be explosive and take it all the way to $7.00
China Techfaith Wireless (CNTF):
Price Target $6.00:
China TechFaith has three primary businesses. It is a leading global mobile solutions provider for the global mobile handsets market (previously called the Original Developed Product (ODP) business). It is a leading developer of specialized mobile phones for differentiated market segments, including the rapidly growing smartphone market targeting wireless mobile phone network operators and end users; it also serves sports enthusiasts with a tailored line under the Jungle brand and the teen market under licensed brands. Under China Techfaith's 17FOX brand (previously "17VEE"), it has built a leading intellectual property (IP) based motion gaming business ranging from Bluetooth-enabled motion gaming controllers and software to a planned proprietary set-top motion game box.
Reasons to be Bullish on China Techfaith Wireless:
Cash position: China Techfaith has an astonishing $268 million in cash on its balance sheet vs. its $73 million market capitalization. This equates to $5.05 per share in cash vs. the $2.20 per share it trades at today.
Real Estate Portfolio: China Techfaith is in the process of building 23 properties in China. I believe that the company needs to supply more details on its buildings or it may be forced to by the SEC. The real estate holdings are valued at $80 million on the balance sheet, but I believe their true value is vastly more. China TechFaith needs to be more proactive in giving more details and specifics on the properties which would act as a key catalyst in breaking out the shares.
Stock Price: China Techfaith has traded this low in previous years, only to redefine itself and attract new investors. Unlike in previous years, this time you have a mountain of cash and a real estate portfolio that could be larger than its cash position by the end of 2014.
Intellectual Property: China Techfaith claims to own all the IP for motion gaming consoles in China. In addition, it has extensive cellular handset IP and is currently pursuing Samsung for IP infringement in the Chinese courts.
CEO Ownership: The CEO owns over 50% of the shares leaving it with a smaller float which could prove favorable on any signs of good news.
Catalysts to look forward to in 2014:
Court Ruling: A favorable court ruling, or a favorable agreement with Samsung in its litigation will validate China Techfaith's IP claims and could result in a one off payment or royalty stream.
Gaming: Sony, Microsoft (MSFT) and Nintendo are all rumored to be gearing up to enter China with their gaming consoles after China recently relaxed it gaming laws. China Techfaith has on numerous conference calls boldly stated that it owns all the IP on motion gaming consoles in China and that it would pursue its IP claims when it presents itself - this could be the news that would see China Techfaith's stock open at its cash position ($5.05). In addition we could see new game releases, or announcements of partnerships with game makers.
Handsets: China Techfaith could sign new handset contracts with service providers outside of China. It is also rumored to be introducing a smart medical device phone in China which could jump start its handset sales in 2014 providing future cash flows to keep its cash position increasing.
Real Estate Portfolio: News of the China Techfaith leasing or selling one of its buildings for strong rental income or strong profit.
Buyback: China Techfaith could finally begin to buy back its stock, putting its cash to tangible use in the eyes of US investors.
Earnings: China TechFaith will release earnings on March 12th, it could use this to give more specific details on its properties.
Coming off a rounded bottom, China Techfaith has been making a series of higher highs on larger volume. Looking for a continuation of the higher highs all the way up to $7.00.
Acura Pharmaceuticals (ACUR):
Price Target $6.00:
Acura Pharmaceuticals is a specialty pharmaceutical company that makes drugs that are formulated to discourage abuse. Using its proprietary technologies, Impede and Aversion, it currently has two products on the market a decongestant called Nexafed and its abuse-deterring technology is used in Pfizer (PFE) Inc.'s painkiller Oxecta.
Nexafed contains pseudoephedrine, an ingredient in crystal meth. Acura says the drug contains inactive ingredients that turn into a thick gel if anyone tries to extract the pseudoephedrine. That means the chemical won't crystallize and can't be made into crystal meth.
Oxecta is an immediate-release drug that contains oxycodone, the active ingredient in OxyContin. It uses Acura's Aversion technology to discourage abuse: if the drug is exposed to water or alcohol, the oxycodone becomes trapped in a gel mixture, making it difficult to get into a needle. If inhaled, it creates a burning, irritating sensation in the nose.
Reasons to be Bullish on Acura Pharmaceuticals:
Cash Position: Acura recently raised $10 million; this will be enough to fund the company for one and a half years. This will let management concentrate on executing its business plan.
FDA & Congress: According to estimates from the Centers for Disease Control and Prevention, 100 people die every day from prescription drug abuse in the United States. According to a study out of the University of Washington, the economic cost of the nonmedical use of prescription drugs in the US is over $50 billion annually. These statistics have brought it to the attention of the FDA and congress.
Valuation: Acura trades at a $90 million market capitalization and it possesses two technologies that are already in commercial use with its Nexafed in 2900 drug stores and it's Oxecta that has a partnership with Pfizer. You're paying $63 million for a company that has strong FDA support behind the scenes and has multiple drugs in its pipeline.
Catalysts to look forward to in 2014:
Pharmacies: Nexafed is currently sold in only 2,900 out of the 65,000 pharmacies in the US. This leaves room for tremendous growth as it gets stocked in more pharmacies. Recently Acura signed an agreement with Rite Aid which will sell it in all its pharmacies and I'm looking to hear more deals being signed in the near term with the likes of Wal-Mart (WMT), CVS (CVS), Publix, or Duane Reade.
Partnerships: With two products successfully brought to market I am looking for big pharmaceutical companies to come knocking on Acura's door to bring other drugs to market using Acura's proprietary technologies. Such deals will usually bring in $10 - $30 million in upfront payments which will be important to Acura cash position.
Prescription Drug Abuse: FDA wants to protect the public from prescription drug abuse and as a result could come out with a ruling that would favor use of Acura's proprietary technologies. I believe that Acura is a pure play in the FDA tackling prescription drug abuse.
Oxecta: After sitting on its hands, Pfizer is now actively engaged in promoting Oxecta and as a result we should see an increase in sales in the coming quarters.
Earnings: Acura will report earnings on March 4th. I will be looking for news on new pharmacies that have added Nexafed to its shelves and an update on Oxecta and Pfizer.
Making a series of higher bottoms off its recent low at $1.40. It is close to breaking out of a large triangle position where the first stop would be resistance at $4.20.