Celebrating a win from Inovio Pharmaceuticals

30 Rock

My reaction after checking INO’s price yesterday morning (Image courtesy of Tumblr, csulaadmissions)

Back in March I wrote about my purchase of shares in Inovio Pharmaceuticals, Inc (INO).  Inovio is a clinical stage pharmaceutical company (meaning it’s in the early stages of developing new drug treatments and vaccines).  I bought in March after the company raised cash to fund expansion.

Since then the stock underwent a 1 for 4 reverse split (for every 4 shares of stock I owned I got 1 share worth 4 times its original price).  The stock had been trading lower for the past few months and I’ve been waiting out what at times was a serious dip in value.

Yesterday though, I finally saw a pop in price thanks to the announcement of a successful step in their drug trials.  In official terms, the company announced “successful results from its randomized, double-blind, placebo-controlled phase II trial of VGX-3100 in women with biopsy-proven cervical intraepithelial neoplasia 2/3 (CIN2/3) associated with human papillomavirus (HPV) types 16 or 18.”

In terms my non-med school educated brain can understand, their drug shows effectiveness in treating cervical effects from HPV.  This is key because there are not currently treatments for HPV on the market, just vaccines.  A successful treatment would be amazing for purely social reasons given the high percentage of the population affected by HPV, plus the very scary diseases some strains can lead to (cervical cancer).  But on top of that, it would be a huge money maker for the company, with estimated sales at $540 million.

This positive announcement makes me even more bullish on the company.  After the jump from yesterday’s announcement I sold my shares for a 20% profit.  Then today I waited for a small dip and bought back in at $12.60.

While I’m pumped about my big gain yesterday, this stock is a long term hold for me.  I expect to see the stock rise significantly over next few years as treatments are brought to market.

Time to buy Apple after earnings report comes in solidly boring

Apple (AAPL) reported earnings after the market closed yesterday, and the report was solid but boring.  Apple posted earnings of $1.28 per share vs. analyst estimates of $1.23 per share, and revenue of $37.4 billion vs. estimates of $37.98 billion.  Apple is up a moderate 2.7% today after the earnings announcement.

The revenue miss was likely due to declining iPad sales, with units down about 9%.  IPhone sales were up 12.7% from the prior year but still short of analyst estimates of units sold.

I stand by my statement that I would wait until after earnings to buy, since I was concerned hype was already priced in.  Yes, Apple did fine on earnings and is up a bit.  But all of the articles on Apple going into earnings were hypothesizing huge numbers that blew past analyst estimates.  That didn’t really happen.

This could be a good thing for you though.  Strong gross margins and earnings mean Apple is in a good place financially and operationally.  And I am still cautiously optimistic that the iPhone 6 and iWatch will come out before the end of the year.  The fact that iPhone sales didn’t meet analyst estimates may mean that there are consumers holding out on a purchase until they can get the iPhone.

The fact that there wasn’t a huge pop after earnings means the stock is still low enough to buy in now and profit off of the new product releases later in the year.  I’d wait until the stock comes down a bit in the next few days and get in.

Turning Yahoo’s Earnings Lemons into Lemonade

Yahoo! Inc. (YHOO) reported 2nd Quarter earnings last night and results were worse than expected. Earnings per share were $0.37, 1 cent worse than analyst expectations. Revenue was $1.04 Billion vs. estimates of $1.09 Billion. The stock is down about 5% from yesterday.

Yahoo was hit by display revenue decline, which was down 7% over the same period last year. An even worse sign: Yahoo has been having to slash ad prices to compete with competitors. Search revenue is up slightly, but still not in line with competitor growth (i.e. Google’s). On a more positive note social and mobile are up nearly 90% year-over-year. Unfortunately, these areas don’t translate to big portions of revenue yet.

While this earnings miss is bad news for Yahoo, it could be a great opportunity for investors. Yahoo made one other big announcement yesterday: it plans to return at least 50% of the cash it obtains from the IPO of Alibaba to shareholders.

In addition to sounding like something from Aladdin, Alibaba is a Chinese e-commerce company. Alibaba is one of the hottest names in Tech currently. For example, Alibaba’s version of eBay features nearly a billion products and is one of the 20 most-visited websites globally. The company is set to IPO (start publicly trading on the stock exchange) on August 8th.

Currently, Yahoo owns about 24% of Alibaba. The company is valued at around $130 Billion according to their IPO filings, and Piper Jaffray even predicts they could be worth $214 Billion. Plus, revenue growth continues to be strong for Alibaba, which saw 39% top line growth last quarter. This all means Yahoo is sitting on a huge potential chunk of change.

Yesterday, Yahoo announced that it had negotiated a deal to keep more of its Alibaba shares, selling 140 million in the IPO vs. the originally agreed upon 208 million. That leaves more money in Yahoo’s pocket and more money for Yahoo shareholders.

I bought 100 shares of Yahoo today because of the chance to get in at a lower share price. I don’t like it as a long term prospect, and will likely only hold through the Alibaba IPO. But, it could be a nice way to get a short term gain from Alibaba’s IPO success.

Why a cupcake empire crumb(led) and why that signals trouble for Coca-Cola

This was a sad week for cupcake lovers.  On Monday, cupcake juggernaut Crumbs (CRMB) announced it was closing all 48 of its stores.  The company was struggling financially as the cupcake fad faded, and faces default on more than $14 million in loans and Chapter 7 bankruptcy liquidation.  It is publicly traded but was de-listed from Nasdaq on July 1st.

While my taste buds are quite upset (their Funfetti cupcake was out of this world), the company’s downfall has a couple lessons to teach us:

1. Trends die; innovation is key

This is a point I bring up time and time again in my posts about Apple (AAPL).  You could have the coolest, most exciting product in the whole world.  But if you’re just a one-trick pony you don’t survive.  The key to a sustainable business is the ability to innovate, particularly if you can anticipate market demands shifting and change before the market does.

The only innovation I’ve seen from Crumbs is was a crumbnut, which was really just a rip-off of someone else’s innovation (the cronut at Dominique Ansel in New York).  Otherwise, the company only had one product – cupcakes.  When the cupcake trend withered, so did Crumbs.

2. Healthy choices matter

I’ve been seeing a growing preference in the consumer market for more health conscious products, particularly among affluent consumers. Now there aren’t cupcake trends; there are boutique gym trends. In NY and DC there’s a new gym opening constantly, including rapid expansion from fitness chains like SoulCycle, Pure Barre and Flywheel.  Plus there are cool start-ups like Peloton Cycle making the boutique gym experience available to anyone, even if you don’t live in a big city.

Crumbs cupcakes – while delicious – were an extremely unhealthy food option.  The huge cupcakes were 600 calorie bombs.  And with its cupcakes costing over $4 a pop, Crumbs was targeting a smaller, affluent customer base.  That strategy worked until the affluent customer base decided they would rather spend $35 on a spin class than $4 on a snack.

So why do I bring Coca-Cola (KO) into the discussion?

Much of the reason for Crumbs’ demise was the shifting preference for health-conscious choices.  As a company mostly known for sugary soda (consider one of the devils in the health world, even the diet version) Coca-Cola doesn’t do well in this healthier environment.  Granted, Coca-Cola is buffered a bit by its large presence in the developing world, but it’s still being hit.  The company’s net income is down a whopping 27% from 2010 to 2013.

Up until now, it’s seemed like Coca-Cola’s version of “innovation” in the face of healthier preferences has been to make new diet versions of its sodas.  The thing is, diet still isn’t healthy.  Health proponents don’t want chemical laden diet versions, they want low-calorie AND all natural.  Coca-Cola needs serious innovation for healthier, natural drinks or it could be in for trouble down the line.

Apple price up on analyst upgrades – time to bite?

Apple (AAPL) had a major shake-up in the markets a month ago when its 7 for 1 stock split went into effect. For every one share of stock investors owned (trading at around $650 per share at the time), they now have for 1/7th of the value each. Apple’s share price has been hovering around the $93 price for the past month until the stock shot a bit higher this morning on the news of analyst upgrades.

This morning Pacific Crest analysts increased their price target from $93 to $100. Analysts are increasingly bullish on Apple, with the average price target for Apple stock at $101.49. The majority of analysis are also pushing a “buy” opinion. Analysts are bullish on the iWatch and iPhone 6 rumors plus Apple’s very investor friendly share buyback and dividend program.

Most analysts are promoting buy, so it’s time to buy, right? Eh, maybe. The key is to use the analyst opinions as a jump start for your own research, not to blindly follow their opinions. Not too long ago, when Apple was trading around $700 per share in 2012, analyst price targets were hitting the $1,000 mark. Not only did the stock never reach $1,000, but the shares essentially crashed.

I’m personally still on the fence about whether or not to buy Apple shares. On the positive side, I think the share repurchase programs and the stock split have made the stock more attractive to a wider net of investors. This means more investors willing to jump on board when positive news hits, thus driving up price. Plus, historical analysis shows that stocks with high dividends tend to be some of the best performing stocks over time. On top of that, a new product launch, such as the iPhone 6 or iWatch could be a huge boost for the company. This morning news came out that Apple hired the vice president of sales for luxury Swiss watch brand Tag Heuer, another indicator that the iWatch could be coming soon.

I hesitate to buy though because I think a truly innovative new product, such as the iWatch, is still far away. I haven’t seen enough evidence yet that this is coming up in the near future. More importantly, the rumors of a new product have been swirling for a long time now. I worry that new products are already too built into the share price and there is not enough room left for a big upward surprise.

Apple releases Q3 earnings on July 22. My plan is to buy if the stock drops back down closer to $90-$91 in the next few weeks. If it doesn’t drop, I’ll wait until earnings are announced and make a buy decision after the market reaction to earnings has settled.

Why snow days are no fun for adults or the economy – GDP dropped 2.9% Q1

Around 9:30 every morning I do an initial check of where my stock positions are for the day.  During today’s check though, I got a nasty surprise.  My positions, which had been been posting nicely higher this week, were all down. What gives!?

Turns out the culprit was snow. We knew the first quarter of 2014 was not a great one for the economy (or my heating bill), as the never ending snow kept consumers out of stores. Many retailers posted lower than expected first quarter results due to the extreme weather conditions of Jan-Mar.

However, this morning the Commerce Department released the final figure of gross domestic product (GDP) growth in the first quarter. GDP is the cash value of everything the US produced over the period. Originally GDP was estimated to have shrunk at about a 1% annualized rate over Jan-Mar this year, but turns out GDP actually shrunk a whopping 2.9% annualized rate.

Not only was this a hugely negative surprise, but this represents the worst GDP growth rate for the quarter since 2009, in the height of the recession. The main reason GDP growth was so bad was because of consumer spending hits (again from people not wanting to leave their houses in a snowpocalypse). Consumer spending was up just 1% in the first quarter, a steep drop from the 3.3% growth rate in the fourth quarter of 2013.

So what does this all mean? My two cents is that this really won’t have much of an impact after this week. Again, this news doesn’t actually mean anything changed. The bottom line impact of these figures already occurred back in the first quarter. Since public companies have already reported their Jan-Mar quarter earnings reports, the slowed consumer spending impact should have already been priced into securities.

Once the initial shock of the downward surprise sinks in, the market should stabilize. And optimistically, economists forecast the economy will expand at about a 3.5% annual rate in the second quarter. In the meantime, hopefully this rallies global climate change response.  

Amazon’s not phoning it in – phone promotes cool 3D experience and shopping integration

Remember a few weeks ago when I proposed buying Amazon (AMZN) when it dipped below $300?  That may be paying off sooner than I thought.  Amazon has been hyping a “secret” new device recently.  In a touch of marketing genius Amazon even published a video with people gushing over an amazing device just out of the camera shot.

Spoiler alert: The new device is a phone.  Full details will be released during the launch on June 18th, but what’s been leaked so far indicates the phone will be pretty cool.

The feature customers are exclaiming over in the video appears to be a program that alters the phone’s display based on your head movements.  The feature can give the phone more of a 3D, augmented reality affect.

The phone release means great news for the company first just as a new revenue stream and big creator of buzz.  More importantly though, the phone will integrate with all of Amazon’s shopping features to push phone owners to shop more on Amazon.

The phone will likely incorporate the feature in Amazon’s app that allows you to take a picture of a product and get a link to purchase it on Amazon.com.  The phone will also feature indoor GPS, which can be used to gather data on where you are shopping and push you to Amazon partners. So not only will the phone provide Amazon a new revenue stream, it will strengthen and expand its existing, key revenue source.  I wouldn’t be surprised if pricing on the phone were low to reflect this shopping benefit.

The product launch comes at a great time for investors.  Amazon is coming off a big drop in share price, hovering around $300 for the past month.  The stock increased about 6% yesterday after phone details emerged, and it will likely rise further after the June 18th launch date.  Early next week could be a good time to consider buying – after the initial phone news subsides but before the official launch occurs.

If you want to go to the launch yourself click the picture above to access a short request form.  Just make sure you have good answers to questions like, “Describe an innovative way in which you have used gyroscopes, accelerometers, or other device sensors in your app development.”