My choices for Best Buy Now

I anticipate that the sell off may continue for a short while. This is creating a buy opportunity for the long run. So I’d like to hear your thoughts in terms of the Best Buy Now. Preferably, I’d like to hear names that your are most bullish AND have been unjustly and severely punished in the sell off.


This is a great question. I waited until the weekend to respond so I could give it some thought. I especially like this part “AND have been unjustly and severely punished in the sell off,” as my stocks like WAB and MTZ are great companies, but haven’t been as severely punished in this bloodbath, and so aren’t the ones I’d necessarily add to now.

Here are my thoughts in roughly alphabetical order. Please remember they are only my opinions and I have no special degrees or licenses in this business. Please make sure that you decide for yourself. Remember that PE’s that I use are based on adjusted earnings always.


AFOP – we started talking about it at about $11.80, at which point it was grossly undervalued. It gradually worked up to $13.80 at which point they preannounced great sales and earnings and jumped to an intraweek high of about $16.90. They’ve now come back just to about $15.80, so while I added a little this week, they certainly aren’t a best buy now.

AMBA – is down 25% from its high. On no company specific bad news. Trailing PE is 24. Forward PE is of course even less. A choice for a buy now.

APPY – This is a little company and a very small position for me (1%). They were about $2.50 when they got the definitive results for the study involving their one product. The results were great. They anticipate quick FDA approval and the stock price rose to $3.30 on the news. They did a quick secondary (which means dilution) to raise money for commercializing the product. Then this three weeks of selling hit and the price has fallen back to $2.00 for a 38.5% drop, and 20% below where they were before the good news. If you don’t have any, it’s a best buy for a very small position.

BOFI – This is a best buy in my opinion. It’s down 24% even after coming back to $80 and its trailing PE is a very reasonable 24.7

CALL – I got interested in this company through someone else’s post on this board. It’s a great turn around story with new management and a total facelift. They have $2.89 in adjusted earnings, and a price now of $18.89, for a PE of 6.5. They are down about 23% from their high point recently. Granted that the end of the story has yet to be told, but I’d consider this one of my best buy nows.

CELG – great company, great price, and I’ve bought some recently. A buy, but probably not a best buy now.

CSGP – This is the Zillow of commercial real estate. Like Zillow, a very high PE ratio. Price has dropped from $207.50 to $155 in three weeks, over $50 and more than 25%. If you’d like to take advantage of the drop, just remember that the trailing PE is still quite high (60).

ELLI – The price has dropped from $32 to $24, a nice round 25%. $24 is really a very low-risk price for this company that has its field locked up. A best buy now, in my opinion.

HZNP – In three weeks price has dropped more than $5 from $17.40 to $12, or 31%. Only news being that they got another patent approved. They aren’t making money yet, but will be this year. Not a best buy now, but I’d say certainly a buy for a small position if you don’t have any.

INVN – I sold to raise money to buy stocks that had fallen more. Maybe a mistake, but that’s what I did.

JCOM – I started a position in JCOM this week, but not at all what I’d call a best buy.

LNKD – As you may remember, I sold out of my LNKD mostly about $240, saying it was too high. (It actually got as high as $260). Here it is, at $166, down more than 35% from the high and I restarted a position. Still a huge PE, and thus NOT a best buy.

MTZ – Has hardly budged with all the selling, so doesn’t qualify as a stock “severly punished”. I haven’t sold a share, but am buying other things at present.

P – I started a small position in Pandora two weeks ago, but it’s dropped 20% since then. Growing revenues over 50% each quarter but still low earnings and high PE. Risky and not a best buy now.

PSIX – Holding its own pretty well, so it doesn’t qualify as a “severely punished” stock.

SCTY – Has dropped an incredible 37% from $85 to $54. Future earnings are controversial so I don’t think I’d call it a best buy now, even though I like it.

SYNA – Has held up pretty well since it’s not a high flyer, with a PE of about 13 or so. It’s a good buy at this price but hasn’t been “severely punished” (down 16% from the top).

SZYM – Everything is going right with this company which could turn out to be a very major company as all its factories come on line. It’s down $4.00 from its high of $14.70 four weeks ago to $10.70 now. I’d consider it high priority.

TSLA – has held very well considering, and is still up near the top of its range.

UBNT – is sporting a reasonable 24.6 PE ratio, and is down almost $20, or 34%, from its high of $56.40 to $37.20. No bad news that I’m aware of. I’d consider it definitely a best buy now.

WAB – great company at a reasonable PE, but like MTZ, doesn’t qualify as it’s not been “severely punished” at all.

Z – I like it, but it’s near its recent highs and its at a very high PE, so doesn’t qualify as a best buy now.


APPY… anticipate quick FDA approval and the stock price rose to $3.30 on the news. They did a quick secondary (which means dilution) to raise money for commercializing the product. Then this three weeks of selling hit and the price has fallen back to $2.00 for a 38.5% drop, and 20% below where they were before the good news

Saul, is it pretty typical for biotech companies to constantly dilute their shareholders? My only other experience with a biotech was Exelixis (EXEL), and that’s exactly what they did. Investors who took on the early risk saw zero returns even after their drug received FDA approval because the company would issues new shares every time the stock rose on clinical trial progress and milestones. I finally got out of it in late 2012 after feeling very burned by management. I see their stock price still hasn’t budged in the 1.5 years since.

I haven’t touched biotech since then, but maybe my experience was an anomaly. How have biotechs generally treated you as a shareholder (assuming their drugs are successful)?



Saul, is it pretty typical for biotech companies to constantly dilute their shareholders?

Neil, I almost never invest in biotech companies so I’m not the person best qualified to answer your question.

APPY, though is somewhat different. Biotech companies usually have a long pre-clinical period of research on a potential drug, then a long long period of studies, phase 1 studies, followed by phase 2 studies, followed by phase 3 studies, lasting for years and years, and each one very expensive and time-consuming. Then if everything, by some miracle, is successful, they have to hope that the FDA will approve it.

APPY is much simpler. They don’t have a drug to nurse through that whole process. They have a blood test which is used in the emergency room to rule out appendicitis for patients who come in with stomach pain. This is a big deal because the test costs $75, while a workup for appendicitis can cost several thousand dollars. Appendicitis is serious and thousands of people die from it each year. This means the hospitals are glad to have the test and the insurance companies are glad to pay for it.

They just finished their pivotal US test and got even better results than they had in their pilot study: they could rule out appendicitis with 97.3% accuracy, and there are very, very few things in medicine that work with 97% accuracy. They expect quick approval and are set to start commercializing their test in hospital ER’s.

It’s a small company so I have kept my investment very small.



I almost never invest in biotech companies

Saul owns or has owned several biotech companies over the last few months. He seems not to want to take on the large risk associated with the lengthly drug approval process. Most of his picks do not have this risks. Some are established, some operate in non-regulated markets, and most/all already have rapidly growing product revenue. Such companies are more in control of their own destinity and less susceptible to share dilution. GALE was an exception but Saul quickly sold his small position.


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Your opinions on these stocks are SO valuable to me (and the others I’m sure).

I really appreciate you taking the time to organize your thoughts and share them with us.

I hope to start a couple positions + add to some others.



Thank you for your very deliberate and thoughtful response.

Here is my short list for BBN in the order of priority – it is tailored to my specific situation. I don’t know where is the bottom, but I am confortable with these stocks at the current prices.

HZNP - has a 800-million market cap. Its share price has dropped from recent high of 18.30 to Friday’s 12.02 as it is riding Mr. Market’s roller coast. Although its price is going down, analysts are actually increasing their eps estimates for this quarter, next quarter, this year and for next year. From the rear view mirror, its ttm p/s is around 10, but its forward 2014 p/s would be just under 4 and 2015 p/s around 2 at last today’s price. The mass selling has thrown out the baby along with the bath water. I will start a 1% position today. Saul, thank you for bringing this name to my attention.

SYZM - small cap company with very long run way, strong technology platform that will be a launch pad for new and innovative products, has dropped more than 25% in past few weeks, partly due to market volatility and partly due to its secondary, has many catalysts in 2014, has huge long-term potential. It will be volatile short to mid-term as speed bumps and setbacks are unavoidable in its production ramp-up process. I have been buying in the past several weeks and have a 2.83% position. I will raise it to 4%.

UBNT - strong/unique business model that resulted in strong results in the past few quarters. dropped 34% from recent high of 56+ for no apparent reasons. Has good value with ttm p/e at 25ish and forward p/e under 17. I have been adding to the position lately and currently have a 3.57% position. I will raise it to 5%.

LNKD - has dropped from 260ish to around 160. The share price started to drift down before the end of last year after a strong run, well before the recent market downturn. Its rich valuation is a concern. But its long term potential is huge. The company has strong and visionary leadership, and serves a very useful purpose. IMHO, it is not just a web site for job seekers or head hunters as many people may think. For those who are young and career-minded, it is a great place to find and seek advices, learn from the more successful, build relationships, and nurture and develop one’s career. It used to be that you need family connections, or go to elite schools or happen to know the right people or you are just lucky (those are still important), but LNKD has definitely opened up a new path for the average Joe/Jane who is short in family connection and long in ambition. So, if it was good for me at $250, it should be better for me at $160. I will add a few more shares to my current 5.57% position. This is also a SA BBN from Team Tom.