Regular readers of my columns know I that I love to troll for busted IPO's. I love stocks that came public with great stories but have lost the interest of investors and have gone through their insider lock up periods. I especially like when I can get these shares 50% to 75% cheaper than their initial IPO price if the positive story on the company remains intact. One such highly speculative stock that fits these criteria is Sunshine Heart (SSH) which came public in February. It offers a unique medical product and looks well on its way to gain FDA approval and has other important catalysts. It is easy to see why analysts believe the shares can more than double.
Recent positives for Sunshine Heart:
- Canaccord Genuity initiated the shares as a "Buy" on Friday
- The company just successfully completed an $18mm capital raise.
- At the end of August, the company filed its submission for an Investigational Device Exemption with the U.S. Food and Drug Administration (FDA) for its C-Pulse system.
- It received approval for this system for Europe at the end of July.
"Sunshine Heart is an early-stage medical device company, focuses on developing, manufacturing, and commercializing C-Pulse Heart Assist System for treatment of Class III and ambulatory Class IV heart failure." (Business description from Yahoo Finance)
4 additional reasons SSH is still a solid speculative play at $7 a share:
- An insider bought over $100K in shares in mid-August at higher prices.
- The mean analysts' price target by the three analysts that cover the stock is $20 a share, price targets range from $18 to $26 a share.
- The company easily beat earnings estimates in its first quarter as a public company and consensus estimates for both FY2012 and FY2013 have improved over the past few months.
- With the capital raise, the company now has a robust balance sheet that should provide the funds needed until the company becomes profitable as its C-pulse system continues to gain approval and sales.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in SSH over the next 72 hours.