Whoa! These 3 Stocks Thrive in Sequestration: MGIC Investment Corp. (MTG), Cree, Inc. (CREE)

Analysts say the clouds have parted for the insurers, and Barclays PLC (ADR) (NYSE:BCS) thinks it’s no longer how much further down they’ll fall, but rather “how much upside there still is despite the big move since bottoming in August.” The industry could return to normalized earnings by 2015 as it moves toward profitability and the high-risk legacy business expires, but of the two, MGIC Investment Corp. (NYSE:MTG) is seen as the better bet by analysts because Radian has greater capital needs.

Seems to me if the FHA is trying to limit its risk by limiting the scope of its exposure, that could mean the private mortgage insurers will be incurring it. In the short term, this may benefit MGIC Investment Corp. (NYSE:MTG), but longer term, we may find ourselves right back where we were.

License to kill
Biotech Dyax also jumped after analysts weighed in on its prospects with Jeffries Group setting a $6 per share target on its stock.

While it might seem to be a bit of too little, too late when it comes to Dyax, since it was one of the best performing stocks in the market last year having surged 156%, the Jeffries analyst says there’s still a lot of room to run yet because of its treatment for the orphan disease hereditary andioedema. Kalbitor had sales of $39.8 million in 2012, up 74% from the year-ago figure, and management expects sales to grow as much as 40% this year.

Jeffries believes Dyax’s stock price has also not yet had factored in the potential wealth-generating capabilities of its licensing and funded research program. Dyax has 13 royalty and milestone-eligible candidates in clinical trials, three of which are in phase 3 testing and four are in phase 2 development.

Although Dyax shares have hit a new 52-week high and are at levels not seen since 2010, the stock is still well below the all-time high of $54 a share reached back in 2000.

A bright idea
LED lighting specialist Cree, Inc. (NASDAQ:CREE) didn’t need analyst assistance to cause its stock to spike; it only needed to break through the $10 barrier. It introduced an LED light bulb that will sell at The Home Depot, Inc. (NYSE:HD) for $9.97 a bulb, believing the 40-watt replacement LED will be the catalyst that finally pushes the consumer away from incandescents.

The technological advancement has always been considered the next progression in lighting. Compact fluorescents — those curly pigtailed bulbs — were really just a way station on the path toward the greater efficiency of LEDs. Despite CFLs containing toxic levels of mercury that makes disposing of them hazardous, it didn’t stop the dim bulbs in Congress from banning high-wattage incandescents as a means of pushing the consumer forward. In a misguided attempt to be green, politicians probably created more environmental risk, even though companies like Cree, Inc. (NASDAQ:CREE) were already developing the technology to bring the price of LEDs down.

Price was always the one sticking point for the technology to gain mass consumer appeal, and Cree, Inc. (NASDAQ:CREE)’s breakthrough of that barrier could indeed be the game-changing event that tilts the field in its favor.

The article Whoa! These 3 Stocks Thrive in Sequestration originally appeared on Fool.com.

Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends Home Depot.

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