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(Best) DNDN, LULU, LNC (Worst) NCTY, BKC, ISCA from Better Trades
April 23, 2009
Coming off the third consecutive week in which the major indices posted gains, March proved to be the best month, with regards to percentage gains, in which the markets have seen since the 1930s. Over the past week, several companies made solid increases in their market share, while others were not as profitable during the markets push higher.
Top 3 Stocks
DNDN – Dendreon Corp. ($6.30 to $17.99) +185.5%
The most impressive surge in market share over the past week’s trading came from the Dendreon Corporation (DNDN), which discovers and develops immunological-based therapeutic products for the treatment of cancer. Using antigen engineering and proprietary cell separation technologies, Dendreon develops therapeutic vaccines that induce cell-mediated immunity, the body's key defense against cancer.
One the propelling news stories of the week for the company’s performance came as the company presented data from its P-11 Phase 3 study suggesting that its product Provenge induces long-term memory immune responses that are durable and can be maintained following boosting.
Provenge Treatment is a randomized, double blind, placebo-controlled trial designed to evaluate the safety and biologic activity of the drug in men with non-metastasis androgen-dependent prostate cancer who have had a prostate-specific antigen recurrence following removal of the prostate.
Over the course of last week’s trading sessions, shares of Dendreon jumped more than 185% in market value, strictly from positive results from the test trials. On news that the company was upgraded by analysts from Lazard Capital Markets, shares of DNDN surged once again by the close of Monday’s trading session, jumping from just over $6 a share to nearly $18 a share by the close on Friday. To start the week off, DNDN shares added another 8.5%, or $1.53, to last week’s totals to close at $19.52 per share.
LULU – Lululemon Athletica Inc. ($10.84 to $14.26) +31.5%
Another company benefiting from more buying throughout the markets was Lululemon Athletica Inc. (LULU), a yoga inspired athletic apparel company that creates components for people to live longer, healthier and have lives that are more fun. The company achieves those goals by producing products that help keep people active and stress free.
Much of the stock’s positive performance over the last week was attributed to an upgrade from analysts from William Blair & Co., to “outperform” as sales have begun to level off, while markdowns to promote sales have kept the company’s inventories low throughout the recession. Analysts also added that Lululemon was a "compelling investment opportunity."
In promotion of the company’s highly anticipated e-commerce website, LULU launched the site where guest can shop, “clothing optional,” for a variety of yoga and core athletic apparel. To ensure affordable shipping for guests in North America, Lululemon has established warehouses in both the U.S. and Canada.
“We are pleased to have been able to accelerate the launch of the site to Spring from Fall,” Lululemon CEO Christine Day stated early last week. "We see the introduction of this alternate channel as another important way to connect with our guests and provide them with access to our products like never before.”
Having posted weekly gains of more than 31%, shares LULU were pushed lower at the beginning of the new trading week. After reaching a price of $14.26 per share at the close of Friday’s trading session, shares of Lululemon slipped more than 12%, or $1.77, to conclude the start of the week at $12.49 per share as the overall markets plummeted. Over the last year, shares of LULU have traded between $4.33 and $37.33 per share.
GMKT – Gmarket Inc. ($18.12 to $23.78) +31.2%
Not as impressive as Dendreon’s stock surge over the past week, shares of Gmarket Inc. (GMKT) did however, post substantial gains during the week’s trading sessions as well. As a leading retail e commerce marketplace in Korea, Gmarket offers buyers a wide selection of products at competitive prices and sellers a comprehensive and flexible sales solution. The company provides highly scalable prices, while facilitating the sale of products in small and large quantities to a number of potential buyers in a convenient, cost effective and secure manner. .
Announced at the start of last week’s trading, Gmarket was tendered an offer from eBay (EBAY) for $24 a share, in cash, for all outstanding GMKT commons shares along with all of their American Depositary Shares (ADS), for a total purchase price of $1.2B. Within the deal, eBay currently has plans to combine Gmarket and another Korean online marketer, if the deal receives approval from Gmarket’s governing board.
Further relating to the buyout offer from eBay, Yahoo! Inc. (YHOO) has agreed to sell their 10% state in Gmarket to eBay. The selling price from Yahoo was not offered in the company’s statement. However, Yahoo did mention that the company would continue to have operations in South Korea following the sale.
With gains of more than 31% during the past five trading sessions, GMKT shares climbed from just over $18 a share to nearly $24 a share. Despite the increase in market value over the past week, shares of Gmarket were flat after Monday’s session, to close out at $23.78 per share. Over the past year, shares of GMKT have ranged between $11.43 and $26.42 per share.
Worst 3 Stocks
NCTY – The9 Limited ($13.93 to $10.70) -23.2%
Leading the way for a stock’s percentage loss for the past week was The9 Limited (NCTY), which is involved in the development and operation of online games, and Internet and website related businesses in the People’s Republic of China. The company’s primary focus lies within multiplayer online role-playing games (MORPGs), including World of Warcraft (WoW) and other games in China.
By the middle of last week, shares of NCTY were heading lower, mainly on news that the company lost the right to host Activision Blizzard's (ATVI) popular game World of Warcraft. In an internal letter sent to employees, management confirmed that the company would lose their licensing agreement come June 8.
"The9 gets 90% of its revenue from World of Warcraft. Loss of the game would mean cash burn for the company in the next few quarters," stated an analyst from Think Equities. In another statement released from another analyst, this time from an options strategist from WhatsTrading.com, "The reports said The9 will transfer computer hardware and employees related to World of Warcraft to an unnamed operator. The firm will receive $22M for hardware and computers it purchased for $73M."
By the sound of the closing bell on Monday, shares of The9 continued with last week’s downward slide. At the conclusion, shares slipped an additional 10.7%, or $1.14, to close the first session of the week at $9.56 per share. over the course of the past 52 weeks, NCTY has traded within a range between $8.62 and $28.50 per share.
BKC – Burger King Holdings Inc. ($23.56 to $18.19) -22.8%
Another stock that had a dismal trading week was Burger King Holdings Inc. (BKC), which saw its market price drop nearly 23% over the past five trading sessions primarily on a preliminary release of their 3rd quarter revenue estimates. Burger King, which owns and franchises fast food hamburger restaurants, announced that revenues for the quarter would come in well below market expectations, missing estimates by more than 4%.
In their statement released last Wednesday, BKC acknowledged that their preliminary findings showed revenues for the quarter to be around $600M, up 1% from last year’s 3rd quarter totals of $594M, but below analysts’ prediction of $625.8M. Although the company’s earnings per share is expected to come in between $0.33 and $0.35 per share, with analysts looking for $0.33 per share, the lower revenues are a direct result of a weakened economy, even with more and more people choosing fast food over more expensive sit-down dinners.
As Burger King’s downfall continues, McDonald’s (MCD) appears to be reaping all the rewards. Of recent, McDonald’s has been gaining market share in nearly every market and that sales were increasing steadily since the beginning of the year, despite the global recession.
Whether BKC can turn things around in the upcoming year remains to be seen. As the company’s stock dropped to just over $18 per share by the close on Friday, Monday’s session brought similar results. At the close, shares of BKC lost another 4%, or $0.73, to close the session at $17.46 per share. over the past year, shares of Burger King have ranged between $61.56 and $30.95 per share.
BGG – Briggs & Stratton Corp. ($17.51 to $14.05) -19.8%
Lastly, Briggs & Stratton Corp. (BGG), one of the world's largest producers of air-cooled gasoline engines for outdoor power equipment, designs, manufactures, markets and services these products for original equipment manufacturers worldwide. Upon hitting a mark of well over $17 a share to start the week off, Briggs and Stratton saw their stock’s price tumble over last week’s session and especially after the company’s release of 3rd quarter results on Thursday.
Within their report, BGG confirmed that the company’s profits dropped to $25.4M, or $0.51 per share, in sharp contrast to last year’s earnings of $38.9M, or $0.78 per share, a decrease in net income of nearly 35%. During the period, BGG was affected significantly from the current exchange rates, particularly in Europe.
As for the company’s revenues during the quarter, Briggs & Stratton recorded overall sales totals of $673.8M, down more than 7% from last year’s total revenues of $725.8M. On average, analysts were anticipating that the engine and power equipment manufacturer would book net earnings of $0.64 per share on overall sales figures of $720.3M. within their engine segment, sales slipped 12% to $480.2M, while their power equipment division saw sales increase marginally, up 3% to $250.2M.
In order to help keep capital on their books, BGG reduced their quarterly dividend to $0.11 per share, payable on June 26, from $0.22 during the 2nd quarter. For the remainder of the year, Briggs & Stratton expects annual income to come in between $0.46 and $0.65 per share, or $23M to $32M, down from a previously stated range of $0.81 and $1.01 per share , or $40M to $50M.
The start of the new trading week brought similar results as the previous week. By the end of Monday’s session, shares of BGG were down $0.34, or 2.4%, to close out at $13.71. During the past year, shares of BGG have traded as high as $21.51 per share, and as low as $11.13 per share.
2009 Better Trades Article
brought to you by
BRIAN MULLIN
