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DNDN And The Firesale Buy.

|Includes: Dendreon Corporation (DNDN)

As most of you know, DNDN was absolutely skewered today- more than half of its value was cut down because of an earnings report that failed to convince investors of the soundness of the company's earnings. However, DNDN's earnings report by no means should have warranted such a precipitous drop.

Semi-obscure stocks such as DNDN are prime targets for speculative traders who sell at the first sign of a downturn. A drop of this magnitude can confound even the most astute "buy-and-hold" investors, but makes absolute sense to sell to people who buy/sell on trends. However, a positive aspect of this drop is that it flushes out a lot of the volatility in the stock (as of now). Also, the general hostility of the market has played an essential role in the diminishing of volatile growth stocks such as DNDN, and the management's retraction of its future forecast also contributed to the firesale. 

In a sale high on emotions and arbitrariness, we need to get down to the essentials. Upon closer inspection, DNDN has some extremely positive factors going for it.

  • Sales Change % From Same Quarter of Last Year: 1664%
  • 3 Quarters of EPS Acceleration
  • 3 Year Sales Growth Rate: 567%
  • Debt/ Equity Ratio: 11%
  • Gross Revenues Increase From Prior Quarter: 81%
These factors show that, although the technical analysis for DNDN might be horrid (72.1% off 52-week high) it is still a tremendous growth stock.  Practically nothing has changed, except now it is a tremendously undervalued growth stock that has seen a significant amount of its speculative traders flushed out.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.