Our daily news service, Money Morning, occasionally republishes some of my more-newsworthy Private Briefing columns.
Well, after Money Morning republished my Jan. 18 column "Don't Get Suckered by the Boeing Media Frenzy," a number of readers ripped me for recommending the shares of a company involved in a scandal.
While conceding there was a serious safety issue at hand, I argued that a pack-journalist mentality had escalated that story into a feeding frenzy so big that investors were dumping the shares of what was actually still a healthy company. In that column, I actually detailed seven reasons Boeing Co. (NYSE: BA) would navigate the crisis, enabling its stock to rebound.
Rather than relying on a substantive analysis, the readers who criticized my argument seemed to be making more of a "value judgment" … that it was unseemly to take advantage of (and profit from) Boeing's beaten-down share price because the company had done things wrong and created the safety situation.
As Kenneth D. said: "I suggest that your article is in fact making light of this potentially serious situation and that most of the media is correct."
And, as another reader told me: "I wouldn't feel right investing in Boeing."
Those are the same kinds of "socially responsible investing" arguments that folks make when they say they won't buy the shares of companies that sell liquor, that do business in certain countries, or that advertise on certain television shows.
Believe me when I tell you that there are certain kinds of stocks I won't invest in, either. But when it comes to my role here, my job is to help you make money – to bring you the best profit opportunities that our experts here can find.
That's not a rebuke – not at all. In fact, if readers choose to ignore certain recommendations on "socially responsible" grounds, that's totally cool … totally fine.
I have no issue with that, whatsoever; indeed, I laud them for having such strong views and respect them for sticking to their principles.
But a decision like that is for the investor to make – not for me to make for them. We make the recommendations … it's up to you to decide if those recommendations are right for you on the basis of risk, timing, cost – and even your own values.
In fact, if I was certain that a particular stock was going to rebound strongly – but decided not to share that analysis on "socially responsible" grounds – then I feel I'd have abdicated the job you're paying me for.
And, with Boeing at least, the results speak for themselves.
Boeing closed at $75.04 the day my column was published. It traded as high as $81.95 yesterday, setting a new 52-week high. That's 9% above its Jan. 18 close, and is 32% above where we recommended the stock on Sept. 29, 2011. Add in the $2.67 in dividends that have been paid or declared and you're talking about a 37% return.
And we believe there's more to come.
Is there more trouble ahead for Boeing with this "Dreamliner" mess?
The most likely answer is "yes." But unless there's a new development that significantly changes the story, Boeing is strong enough to navigate this turbulence. And if you go back and read my January column, and the initial recommendation, you'll see that we believe the long-term outlook is solid.
While we're talking about performance, Boeing isn't the only Private Briefing recommendation that's done well of late. A number of the stocks we've been writing about have been hot – red hot.
Let's look at a few.
Astex Pharmaceuticals Inc. (Nasdaq: ASTX): This oncology biotech, recommended back on Dec. 5, soared 11% on Wednesday and was up another 6% by yesterday afternoon – meaning the stock has gained 48% since we told you about it. That's just the latest in a string of biotech winners, including two that have tripled and another that has doubled.
The other stock we wrote about that day – Cyclacel Pharmaceuticals Inc. (Nasdaq: CYCC) – hasn't done as well. If you'll recall, we candidly admitted that, although we'd been looking at it for weeks, it made a couple of big moves just days before we published our report. Had that not happened, we'd be sitting pretty with Cyclacel, too (or at least wouldn't be sitting on a loss).
But we still like the stock – chiefly because it meets one of our favorite requirements: There are multiple potential catalysts that could push the stock's price higher. First, the company has an interesting technology. Second, Cyclacel is involved in litigation, and a favorable outcome could ignite a big rally – and, from what we've read, it appears to have a good case. Third, and last, there's a very good chance this company could end up as a takeover play.
NQ Mobile Inc. (NYSE ADR: NQ): It's not often that a stock gains 100% or more, gives a big chunk of that gain back, and then doubles again. But that's precisely what security play NQ Mobile has done for Private Briefing subscribers. Chief Investment Strategist Keith Fitz-Gerald recommended NQ Mobile in the December 2011 special report "The Five Stocks You Have to Own in 2012" – and it proceeded to gain as much as 153%.
The stock subsequently reversed course and gave back a big part of that gain. But it's been surging anew of late – helped most recently by a new deal we told you about on Tuesday.
NQ shares surged as much as 21% on Monday after the Beijing-based firm said that it's collaborating with America Movil SAB de CB (NYSE ADR: AMX) to bring mobile security to customers across Mexico and Latin America. This deal is a big one because it aligns NQ with the world's third-largest mobile network — with 262 million subscribers.
The stock then surged as much as 22% yesterday after the company crushed expectations with its fourth-quarter financial results – and boosted its guidance yet again.
NQ said user growth caused its fourth-quarter net income to grow 53% to reach $4.9 million, or 23 cents a share (adjusted). Analysts had expected 16 cents a share. Revenue more than doubled to reach $30 million – $1 million more than expectations.
The company raised its full-year revenue guidance to a range of $178 million to $183 million – a hefty bump from its previous forecast of $150 million to $155 million.
At its peak price yesterday (I wrote this before the market closed), NQ shares were up 113% from where Keith recommended them to you two Decembers ago.
Delcath Systems Inc. (Nasdaq: DCTH): As we told you back on Feb. 28, this micro-cap biotech/medical device player is getting closer to an FDA decision on its innovative liver-cancer treatment system. And the stock continues to respond. We most recently recommended it on Sept. 13 in a report that we just updated, and the shares are up about 10% since that time. Delcath is scheduled to report its fourth-quarter and year-end results on March 13.
Smithfield Foods Inc. (NYSE: SFD): The world's largest hog producer, recommended by Permanent Wealth Investor Editor Martin Hutchinson back on Nov. 15, 2011, saw its shares rise as much as 12% yesterday – the biggest intraday gain since May 2009. The reason: The company reported better-than-expected earnings and is forecasting growth at its domestic packaged-meat unit. That's a big one-day move for a $3.4 billion company in a slow-growth industry, and underscores how big a surprise this was. Smithfield CEO C. Larry Pope told analysts the company is looking for acquisitions in the $50 million to $200 million range that are easy to integrate.
Advanced Micro Devices (NYSE: AMD): The struggling chipmaker, the focus of our Jan. 7 column "This Stock is a Bottom-Feeder's Dream," surged nearly 5.4% yesterday, meaning it's only down about 4% since Radical Technology Profits Editor Michael Robinson recommended it.
AMD has announced a technology tie-in with "Tomb Raider,"one of the most highly anticipated PC games of the New Year, and one the company says is part of its "AMD Gaming Evolved Program."
Also, an interesting new trade-journal analysis this week said that the release of AMD's new "Jaguar" core-based Kabini and Temash "system on a chip" (SoC) lines finally has the tech community seeing the wisdom of the company's plan to integrate the CPU (central processing unit) with the GPU (graphical processing unit). The way this writer explained it, AMD is focusing on usable performance instead of mere raw power.
Kabini processors will be aimed at netbooks, ultra-thin notebooks and all-in-one (AIO) desktop PCs, while Temash will target the tablet and hybrids market. It's a "low-power" architecture which could find a lot of fans, given the continued evolution of the portable and mobile-computing wave.
This kind of speculative investment can provide a huge return should it play out as you hope.
However, as we always emphasize with a turnaround play like this one, be sure to factor the high-risk/high-return nature of the stock into your thinking. Realize that the turnaround might not work out, and be sure to use such risk-management strategies as "trailing stops" and position-sizing limits. Know, up front, that you could be in for a volatile ride and that, should the company founder, a total loss is always a possibility. Never chase this type of stock. If you believe these realities will prove too stressful to invest comfortably, don't act on the recommendation.
[Editor's Note: Unless otherwise specified, we recommend that investors maintain a 25% "trailing stop" on all holdings.]