(By Rich Bieglmeier) iStock loves to use accumulation, at least according to how we calculate it, to help us find stocks that Wall Street is buying. You've probably read it here more than once, twice, three times a – Lionel Ritchie – really?
Anyway, the old, reliable axiom is that accumulation precedes appreciation. In other words, the "smart money" on Wall Street buys it first and then connives everybody else to buy, buy, buy now! while they sell.
Our goal is to catch them early in the act so we can get a first class, at worst business class seat for the ride.
A few stocks caught our attention, and we will write about more during the week, but today we'll start with Supernus Pharmaceuticals
). The company that focuses on developing and commercializing products for the treatment of central nervous system diseases saw its stock skyrocket on the news that they received a tentative approval letter from the Food & Drug Administration (the "FDA") for Trokendi XR.
Trokendi is a generic drug used for epilepsy treatment and the company says "final approval is conditioned on resolving a marketing exclusivity issue raised by the FDA regarding a specific pediatric population."
iStock believes the marketing issue isn't going to be an issue.
On the approval news, SUPN jacked from $5.71 to $15.20 in two days – wish we were on it much earlier. As we type, the stock has experienced profit taking and trades for $9.71. From a technical perspective, investors could get a chance to own the stock a little cheaper, maybe closer to $8.15. That is the low for the gap up day. Many times, stocks trace back to, or close to the low on the day of the news, at that point, support kicks in and the stock goes higher.
Supernus recently completed an IPO on May 4, 2012 for 10,000,000 shares priced at $5.00 per share. Of the 10 million shares, roughly half are available for trading through its float. That means SUPN will be subject to wild swings in price.
Additionally, the company saw some advancement for their ADHD portfolio for children and adults as both are moving along with clinical trials at the FDA. Since news on the pair is fresh, it might be a while before investors hear about the ADHD drugs again.
The next big news iStock expects is the market resolution; although, there is no timetable. Wall Street tipped its hand by pushing Supernus Pharmaceuticals (SUPN) to $15 on the initial news. Upon final approval, another attempt at $15 is possible; however, we'd be much more comfortable owning the stock closer to $8.15 than today's price.