I hope everyone had a wonderful Christmas. As a gift of sorts to celebrate this season, let me offer to you my Stock of the Year for 2012.
This one was recently new to my radar, but the more I read about it, the more I liked it. I’ve been nibbling a little bit and have opened a small position. It is small enough that it will not hurt if the stock retraces 30% or more (as these tend to do). I plan to buy a little on the dips, patiently.
The important caveat is that I’m not typically investing/trading based on fundamentals as fundamental analysis is not my forte. I can tell you the company has a lot of debt, but that is normal for a biotech. This pick is a combination of my belief that the technology could literally change the world and an understanding of what happens when stocks exhibit a technical pattern that this one is exhibiting. In other words, it is a combination of hope and technicals and a little bit of intuition.
Why hope? Should the company actually be able to develop the product, they plan to be able to test for various cancers using a simple anti-body based blood test. The test could be administered during routine visits to the doctor’s office. Not only would the technology be life saving, but think about the number of tests that would be administered. The oncology diagnostic market is estimated to reach $8 billion by 2014.
Techinically speaking, the stock has surged off of new lows on huge volume, gaining almost 60% over the past 7 days. These types of surges usually result in big pullbacks of 30% or more following the surge, but some of these types of moves lead to the stock making substantial gains over the next 252 days. The surge is a sign that something has changed. The key is to understand that volatility will remain elevated and to not take on a big position right away.
The company is Bio Time, Inc.
I welcome hearing your thoughts about this company. Since I’m not skilled at digging through financial statements and 10Qs, perhaps I’ve missed some red flags. At iBC, we’ve never been shy about classifying biotechs as hand grenades just waiting to blow off your arm, or more. No risk, no reward. With biotechs, the rewards can be huge, and that is why this is my stock of the year for 2012.