Welcome to Ransom's Stocks in the News where the headline meets the trendline.
Stocks in the News is produced by John Ransom in conjunction with Ransom Notes Radio
.Stock Number One: Ariad Pharma (SYMBOL: ARIA)
And the headline says: Ariad Pharma shares plunge 57%; patient enrollment in clinical studies of Iclusig is being paused- Briefing.com
“The Company is implementing the following actions in its Iclusig clinical development program,” writes Briefing.com. “Patient enrollment in all clinical studies of Iclusig is being paused, and subject to agreement with the FDA, will be resumed with anticipated changes in dose and other modifications. In concert with this action, the FDA placed a partial clinical hold on all new patient enrollment in clinical trials of Iclusig. Patients who are currently receiving Iclusig in clinical trials will continue on therapy.”
What clinical trials give, clinical trials take away.
Ariad Pharma has enjoyed a 52-week high around $25.40. But the stock is been dropping all year on poor clinical results.
The company closed at $17.14 yesterday is now trading today at $5.14
And right on time this from Business Wire: ARIA SHAREHOLDER ALERT: The Law Firm of Wohl & Fruchter LLP Announces Investigation of Ariad Pharmaceuticals Inc.
If you want to know what’s wrong with the country the law firm of Wohl and Fruchter LLP is exhibit number 1.
Because one day, after they are done screwing with Ariad, either Wohl or Fruchter will end up in Congress.
Our Ransom Notes Trendline says: Avoid Ariad Pharma.
Stock number two: Baidu, Inc. (SYMBOL: BIDU)
And the headline says: China Internet Rally Will Continue On Earnings Surprises, Says JPM- Barrons
“Chinese Internet stocks within J.P. Morgan‘s coverage have on average risen 122% this year,” writes Barrons. “On a P/E and PEG (P/E versus growth) multiple basis, the sector is now trading higher than its historical range. Investors are understandably nervous that the rally would soon deflate.”
Not so says JPM.
The company thinks that Baidu’s earnings might surprise people, even if P/E multiples don’t expand.
The companies currently trading about 30 times trailing 12 months earnings, which sounds to me more like a football score then a price-earnings ratio. The stock is trading at 13 times- yes that’s 13 times- sales.
We think BAIDU is BAD 4 U.
Our Ransom Note Trendline says: Sell Baidu
Stock Number Three: Alcoa Inc (SYMBOL: AA)
And the headline says: Thoughts On The First Big Q3 Earnings Number- Seeking Alpha
“The aluminum/alumina company Alcoa's (AA) Q3 EPS came in at 2 cents per share,” writes Seeking Alpha. “However back out various ‘special items’ and this figure rises to 11 cents, which was better than the 6 cents hoped for. So a ‘beat’ in earning parlance terms. Of course, the ‘earnings shuffle’ means that expectations were reduced before the numbers were released.”
The number is good because Alcoa is thought to be a bell weather stock helping determine the general trend of the economy both at home and globally.
That’s said, the chart on Alcoa is definitely bearish with the company trading below both its 50-day and 200-day moving averages.
Earnings have shrunk substantially over the last five years for the company on ppor global conditions. And while that’s expected to change shortly, this is a stock that’s going nowhere real fast.
It’s trading about 20 times its forward price earnings, with the dividend of about 1 ½%.
It is after all only aluminum. How exciting can that be?
Our Ransom Note Trendline says: Avoid Alcoa, Inc.