I began using Motley Fool’s CAPS as a way to disclose when I purchased and sold stocks, and my 97.2 rating showcases my last 10 months. CAPS compares your performance against other investors, but like all investments, you have to continuously reassess your positions. In this article, I am looking at my top four CAPS (portfolio) performers to determine if any are now a “Sell”.
Could There Be Any More Upside?
I bought ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) at $6.09, and it has contributed 214.7 points to my 1,535 total point score.
The company has a market cap of $1.6 billion, having exploded with gains of near 1,200% over the last year — after announcing data on its antipsychotic drug pimavanserin. This is a drug that will enter a Parkinson’s disease psychosis market where there are no current treatments, and most analysts believe that it will also be used off label to treat Alzheimer’s disease psychosis.
Pimavanserin could reach peak sales over $2 billion. Therefore, ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) trades at 0.8 times potential sales, which is far short of the average four times sales in biotechnology. As a result, I still believe that ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) has a lot of long-term potential, and I have no plans to sell the stock.
Just Getting Started
In December, the minute that Rite Aid Corporation (NYSE:RAD) posted a quarterly profit, I bought the stock, at $1.23. It has since returned a gain of 155%, or 137.7 points.
Despite Rite Aid Corporation (NYSE:RAD)’s gains, the stock trades at just 0.11 times sales. In comparison, Walgreen trades at 0.70 times its sales, which shows the value present in shares of Rite Aid Corporation (NYSE:RAD).
The company’s move from unprofitable to profitable has occurred due to the patent cliff in biotechnology. In this article, I explained how $133 billion in annual sales will be replaced with generic drugs during the years of 2011-2016. The year 2014 might be the best year yet for generic drug introductions.
The reason that generics benefit Rite Aid Corporation (NYSE:RAD) is because they pay more per script than brand drugs to pharmacies. Therefore, Rite Aid Corporation (NYSE:RAD)’s margins rise, and since the stock is already very cheap relative to sales, the stock also rises with margins. Looking ahead, I wouldn’t dare sell Rite Aid Corporation (NYSE:RAD) at this point, as I believe that 2014 and 2015 will be even better than what we’ve seen in the last 12 months. The reason being more generic drugs and higher profitability!
Even More Upside?
Questcor Pharmaceuticals Inc (NASDAQ:QCOR) continues to impress, and has racked up gains of 137% since I bought at $29.47, also contributing 125.6 points to my CAPS.
Questcor Pharmaceuticals Inc (NASDAQ:QCOR) markets and sells Acthar Gel, which is used to treat 19 indications including infantile spasms, nephrotic syndrome, and multiple sclerosis among many other diseases. In the last week, Questcor Pharmaceuticals Inc (NASDAQ:QCOR) has soared in value by more than 30%. Yet, despite these gains, I am not selling.