Among the biggest winners in Friday's early trading are Thor Industries (NYSE: THO), Arena Pharma (Nasdaq: ARNA) and Allergan (NYSE: AGN).
|Top Percentage Gainers -- Friday, July 2, 2010|
|Company Name (Ticker)||Intra-Day Price||Intra-Day
|52-Week High||52-Week Low|
|Thor Industries (NYSE: THO)||$25.57||+8.8%||$36.85||$16.65|
|Arena Pharma (Nasdaq: ARNA)||$3.87||+8.7%||$5.93||$2.70|
|Allergan (NYSE: AGN)||$61.75||+6.3%||$65.87||$44.78|
*Table includes companies with minimum market capitalizations of $200 million and three month trading volumes of at least 100,000 shares. All percentage returns are listed as of 12:21PM Eastern Standard Time. Click on ticker symbols for up-to-the-minute price quotes and percentage gain data.
Thor headed for Upside?
Investors in Thor Industries (NYSE: THO) can breathe a sigh of relief. The maker of recreational vehicles announced on Thursday evening that it has just become current with its delinquent regulatory filings. And it appears that no major restatements will be necessary. That’s pushing shares up nearly +9% in Friday trading.
Action to Take --> Shares of Thor are fairly cheap, at around 10 times next year’s EPS forecast of $2.40. And it’s worth noting that the economy is still in a funk, and subsequent earnings may be even more robust. Shares of Thor fell from $35 to $25 in the past two months, but now look set to climb back up.
Not too Late for Arena
Shares of Arena Pharmaceutical (Nasdaq: ARNA) are surging for the second straight day, after the company signed a far-reaching sales agreement with Eisai. Shares had initially cooled after a sharp pop on Thursday morning, as investors questioned why Arena didn’t secure an even larger upfront payment for its anti-obesity drug. But since then, the bullish argument has won out, to wit, Arena stands to rake in huge gobs of money if its drug is a hit. The current market value is not even half of the potential windfall.
Action to Take --> Don’t forget that Arena may still land another partner for foreign marketing rights. That stands as another catalyst for this undervalued stock.
More Healthcare M&A to come
The past few months have seen a large number of deals consummated among biotech players and others in the healthcare industry. Now get ready for a big one. Sanofi-Aventis (NYSE: SNY) disclosed that it may look to pull off a $20 billion whopper. Only a few targets are so large as to justify that kind of expenditure. Investors are betting that it will be Allergan (NYSE: AGN), which is up +6% on Friday.
Allergan has been a serial acquirer itself, and now sells products into a broad range of healthcare niches. Its $19 billion market cap (after today’s rise) tucks neatly below Sanofi’s threshold, although if Sanofi can’t go much past $20 billion, Allergan investors shouldn’t expect too high a premium.
Action to Take -->There’s an old investing axiom worth repeating: you should never buy a stock based on its buyout appeal. And on its own fundamental traits, it’s hard to find value in Allergan’s shares. They trade for 20 times projected 2010 profits, yet the company is only growing at a +6% to +7% pace.
Allergan may indeed be sold for a modest premium, but shares could give back today’s gains if a deal doesn’t materialize in coming sessions. If Sanofi is just now starting in the process of finding ideal targets, it could be months before any such offer is made.