I follow quite a lot of companies, so the usefulness of a watchlist to me cannot be overstated. Without my watchlist, I’d be unable to keep up on my favorite sectors and see what’s really moving the market. Even worse, I’d be lost when the time came to choose which stock I’m buying or shorting next.
Today is Watchlist Wednesday, so I’m discussing three companies that have crossed my radar in the past week — and at what point I may consider taking action on these calls with my own money. Keep in mind that these aren’t concrete buy or sell recommendations, nor do I guarantee I’ll take action on the companies being discussed. What I can promise is that you can follow my real-life transactions through my profile and that I, like everyone else here at The Motley Fool, will continue to hold the integrity of our disclosure policy in the highest regard.
AEterna Zentaris Inc. (USA) (NASDAQ:AEZS)
Here’s a company for biotech-savvy investors who aren’t afraid of taking on a lot of risk for a chance at a big reward. Let’s start off with the basics: I own a very, very small position in my personal portfolio in AEterna Zentaris Inc. (USA) (NASDAQ:AEZS), so my analysis will be partially biased on that accord, but I’ve been thinking of a significant add to my position once the Fool’s disclosure policy allows for it.
The end of July brought mixed reviews from AEterna Zentaris Inc. (USA) (NASDAQ:AEZS)’s shareholders, with the company initiating a secondary offering of 5.2 million shares in order to raise $7.8 million at a price well below the previous closing value. Having only one compound approved the Food and Drug Administration, Cetrotide, a luteinizing hormone-release hormone antagonist treatment for in-vitro fertilization that doesn’t deliver a lot in the revenue department, the downside of owning a micro-cap biotech like this is that dilutive offerings are often needed to raise the cash necessary to keep plugging away at research and clinical studies.
Then again, AEterna Zentaris Inc. (USA) (NASDAQ:AEZS) also announced, just days later, that the first patient in a phase 3 endometrial cancer trial had been dosed with AEZS-108 — what I consider to be its most promising drug candidate. Endometrial cancer has few alternatives at the moment, with perhaps Pfizer Inc. (NYSE:PFE)‘s contraceptive injection Depo-Provera providing the best risk reduction (about 80% according to one study) to getting this type of cancer in the first place. With an overall response rate of 30.8% and a clinical benefit of 74.4% in mid-stage trials, AEZS-108 was able to receive a special protocol assessment, which should help speed it through the review process if all goes well in late-stage trials.
If you’re looking for something in the biotech sector with higher-risk, higher-reward potential, I’d suggest digging a bit deeper into AEterna Zentaris Inc. (USA) (NASDAQ:AEZS).
Tower Group International, Ltd. (NASDAQ:TWGP)
It may have been a while since I’ve mentioned Tower Group International, Ltd. (NASDAQ:TWGP), a property and casualty insurer and reinsurer for individuals and commercial entities — but make no mistake, it’s not been forgotten. In fact, Tower Group International, Ltd. (NASDAQ:TWGP) has rebounded in such a big way that I would strongly recommend that it work its way back onto your radar.
The reason Tower Group International, Ltd. (NASDAQ:TWGP) fell off its perch in the first place was due to a series of catastrophic losses that culminated in Superstorm Sandy last year. Tower Group International, Ltd. (NASDAQ:TWGP), which sells home insurance up and down many states on the East Coast, projected losses of nearly $70 million in November.
However, what shareholders often forget when investing in insurance companies is that, aside from the relatively rare instance of the gross mismanagement of funds, insurance companies are cash cows. Insurance companies actually rely on catastrophes as their justification for boosting premiums. To that end, when the next season goes by without a major disaster, insurance companies like Tower Group International, Ltd. (NASDAQ:TWGP) are then rolling in profits that are even higher than they were before the last catastrophe.