2 Monday Movers That I Would Not Sell!
Brian is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
On any given day, there are certain stocks to trade with large gains, but on Monday, the two largest gainers look to be definite buy-and-hold investments that you should consider adding to your CAPS.
A Can’t Miss Biotech?
ACADIA Pharmaceuticals (NASDAQ: ACAD) is higher by almost 7%, and with no news to drive it higher. This is a company that I’ve been supporting since I purchased it at $6.09, and is also the best performer in my Motley Fool CAPS.
ACADIA will file a new drug application for pimavanserin sometime late next year. The review process could then take anywhere from eight months to one year under normal circumstances. However, since the drug will be approved to treat a disease where there are no current FDA approved medications, I believe the approval process will be timely and prompt.
Then, the real fun begins, as analysts project peak revenue north of $1.75 billion from combined sales in treating Parkinson’s disease psychosis, Alzheimer’s disease psychosis, and other psychotic indications. Currently, anti-psychotic medications are among the top-sellers in the U.S., and pimavanserin is expected to be no different.
With a market cap of $1.6 billion ACADIA could still trade considerably higher over a course of several years, as biotechs trade at three-five times sales on average. Therefore, despite the one-year 1,100% return that ACADIA has gained over the last year, I have no intention to sell shares, and I have no intention to remove it from My CAPS.
The Best Investment In The Market?
XPO Logistics (NYSE: XPO) created new all-time highs on Monday with gains of 13% after announcing the acquisition of 3PD. XPO Logistics is my Top Pick in My CAPS and also my largest single holding, and has been since it was trading at $12.
The $400 million company is being led by Bradley Jacobs, who has built four billion dollar companies in his career, including United Rentals. Back in 2011 he made a $150 million investment in XPO, took over its board and became CEO. At that time, the company had revenue of just $177 million; but over the last 12 months revenue has climbed to $348 million; Jacobs is guiding for revenue over $1 billion for 2014.
The goal is for XPO Logistics to become a multi-billion company, and with his newest acquisition of 3PD, XPO is well on its way. 3PD immediately adds revenue of $319 million and a company that has grown its adjusted EBITDA by 36% in the first five months of 2013. Hence, I think this is a homerun, and have no plans to change my position.
In my book, Taking Charge With Value Investing, (McGraw-Hill, 2013), I called XPO Logistics “the stock of the decade” and “the can’t miss investment”. My reasons can be found in my “unmeasured fundamentals” section, which explains that sometimes the biggest catalyst for a stock is something you can’t measure on a balance sheet or an income statement.
In the case of XPO Logistics, Jacobs has a history of creating billions from a kitchen table, and has hired an all-star executive team from the likes of Goldman Sachs and CH Robinson. As a result, the leadership and experience of the company is remarkable. Therefore, of these three stocks, I believe that XPO Logistics is the best and safest. However, at this point, I am planning to sell none of these three stocks, and I expect large returns for many years to come.
Brian Nichols owns shares of XPO Logistics and ACADIA Pharmaceuticals. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!