The problem with lists of top picks for the year ahead is that they are just a starting point. If you have an effective trading approach, then you can still outperform others even if your stock picks are suboptimal. Good picks make it easier to produce good results, but they are just a starting point.
People like the idea of one-stop shopping. Just buy this stock and then check back in a year to claim your profits. It can work, but you greatly decrease your chances of success when you approach stock picking in this manner.
Stocks never go straight up for very long. They dance around and offer us numerous opportunities to extract profits. I find that closely following some good names will help me time my entries and exits. I don't want to fall in love with these stocks. I want to study them, learn their personalities and find ways to benefit from them.
Here are seven low-priced stocks that I will be tracking in 2017:
Hudson Technologies (HDSN) is one of the largest suppliers of refrigerant and refrigerant recycling in the U.S. The market has been migrating from CFC to HFC refrigerant and this has opened up a large opportunity for HDSN. The story is not well known, but the earnings growth is reflecting the change. The company is expected to grow earnings 34% in 2017. Technically, the stock has formed a good base in December and just started to move higher. I'll be looking for a challenge to the November highs.
Oclara (OCLR) has been a Stock of the Week and on my radar quite a bit. It is a manufacturer of modulators, laser chips, amplifiers and other equipment used in optical networks. Recently it has garnered some attention as a potential takeover play. Fund manager Louis Navellier also mentioned it as a large position. I never buy on takeover speculation alone, but OCLR is expected to see earning jump 200% to 52 cents a share in the fiscal year ending in June, which makes for an attractive valuation. The stock is in the middle of a trading range and I'll be slowly accumulating.
Kosmos Energy (KOS) is an African-based oil production company that does business in Ghana, Mauritania, Morocco and Suriname. It recent entered into a joint agreement with BP (BP) in consideration for payment of $916 million. The stock has been trending straight up since the deal and I'll be looking for entry on a pullback.
McEwen Mining (MUX) is a gold and precious-metals miner that operates in Nevada, Mexico and Argentina. Like most stocks in this sector, it has been beaten down badly into the end of the year and is now seeing a relief rally as the dollar weakens and tax selling abates. It tends to move quickly when the gold sector turns and it is one I'll keep watching as vehicle for a move in metals.
Aratana Therapeutics (PETX) is a biotechnology stock with a twist. Its main market is pets. It develops drugs used for pain, inflation and other issues primarily in dogs. The company anticipates the launch of its Entyce product in the first quarter of 2017. This drug stimulates appetite in dogs and has a large market. The company is working on production at this point.
Global Blood Therapeutics (GBT) is another biotechnology name on my radar. This stock has been pounded down on a questionable short attack and concerns about the length of time before the next major market event. GBT has a drug for the treatment of sickle cell disease. This is potentially a huge market of $3 billion or so. Despite much optimism about its prospects, it has been attacked by a short seller and driven down by tax-loss selling. If this drug is a success, this stock can easily go up 10- or 20-fold, but there is no guarantee. This is one of the favorite speculative names at SharkBiotech.com. I believe it is quite likely we will see some good runs in this stock in the year ahead as the debate over its drug grows louder.
Tabula Rasa HealthCare (TRHC) IPO'd at $12 in late September. The company provides medication management systems for hospitals, nursing homes and other medical facilities. The imprecise use of prescription drugs "represents the fourth-leading cause of death and contributes to an estimated 45 million to 50 million adverse drug events (ADEs) annually with 2.5 million to 4 million of those ADEs considered serious, disabling or fatal. ADEs result in more than 100,000 deaths annually in the U.S. and approximately 125,000 hospitalizations, 1 million ER visits, 2 million affected hospital stays and 3.5 million physician office visits every year."
TRHC is part of one of the main themes I'll be looking at in 2017, which is health care stocks that will benefit from the unwinding and replacement of Obamacare. TRHC is ideally positioned to help cut medical costs. The stock trades thinly and is under the radar but is showing signs of life.
My suggestion: Do not rush out and buy any of these stocks. Put them on a radar screen, research them and watch the charts develop. I'll be discussing them from time to time and will alert you as setups develop.
I want to wish everyone great success in the year ahead.