I am looking at the top performers from my portfolio over the last year, and deciding whether or not it is time to take profits; many of these stocks you too might own.
I began using Motley Fool’s “CAPS” late last year as a way for readers to track my new positions and to show the outcome of my investments that were chosen based on the information found in my book, Taking Charge With Value Investing (McGraw-Hill, 2013).
The CAPS scores allow you to track your selections up against the market, with perfection being 100.00. Moreover, you gain a point for every percentage point that your selection outperforms its tracked index. Here are my current top four CAPS (portfolio) performers.
|Company||Start Price||Stock Gain||Index Gain||CAPS Score|
|ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD)||$6.09||203.94%||6.43%||197.52|
|Rite Aid Corporation (NYSE:RAD)||$1.23||128.16%||11.93%||116.23|
|Restoration Hardware Holdings Inc (NYSE:RH)||$37.60||102.13%||4.1%||98.03|
|Responsys Inc (NASDAQ:MKTG)||$7.78||83.55%||7.8%||75.74|
A Biotech That’s Not Done Yet
ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) has led the charge in my portfolio, and on My CAPS, since buying at $6.09. Over the last year it is trading higher by 930%. Therefore, many might assume that it should be sold.
Since the FDA is allowing ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) to bypass Phase 3 trials for its Parkinson’s disease psychosis drug pimavanserin, it will most likely be available in the market early next year. The product will be the only approved drug for this indication, and analysts anticipate that it will be used for several off-label indications as well.
With a market cap of $1.4 billion and peak sales potential of $2 billion, ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) is still very cheap. As a result, I cannot justify selling it just yet. In fact, I recently bought more at $16.75.
Possible Short-Term Pain, But Long-Term Gain
Rite Aid Corporation (NYSE:RAD) has pulled back by $0.45 since announcing earnings last month, although it posted its third consecutive profit that beat expectations. After a 175% gain since its 52-week lows, I think this pullback is healthy but also temporary.
In a recent article I explained why new generic introductions prove that the best days are yet to come. Thus, I believe this is still a great long-term buy. However, if you are looking for short-term or an immediate producer of gains to your holdings, Rite Aid Corporation (NYSE:RAD) may not be the best pick. This is definitely a long-term and volatile play.
Don’t Let Gains Scare You, This Stock Is Cheap!
Restoration Hardware Holdings Inc (NYSE:RH) is one of my favorite plays in the market. It is growing revenue by more than 30% without expanding its stores. This is a company that grows solely through comparable store sales, which is an incredible feat to accomplish.