The major indices have held up pretty well over the past month, as we get closer and closer to the end of this tumultuous election campaign season. The most likely outcome still appears to be a dysfunctional and divided government, despite billions being poured into negative ads. Being located in the battleground state of Florida, I, for one, look forward to being able to turn my television back on without being bombarded non-stop by these political ads.
However, the higher-beta sectors of equities have been very weak over the past month. Small-caps have sunk much further than the S&P 500, recently. The biotech sector has been taken out and beat like a rented mule, especially the small concerns in the industry, many of which lost 20% to 30% of their value in October. But a few small-cap stocks I have profiled numerous times seem to be bucking this downward trend and delivering good news to their shareholders. Today, we revisit three of these small cap concerns.
Healthcare Insurance Innovations (HIIQ) continues to deliver outstanding results. After the bell last night , the company reported an almost 80% rise in year-over-year revenue. Earnings per share came in at $0.33, triple the consensus. If the Republicans retain both the House and Senate, this is a company that should benefit, as regulations/legislation impeding some of the growth of its niche products should ebb.
Home builder Taylor Morrison (TMHC) delivered more-modest quarterly results that nonetheless were more than solid. The company produced $0.49 a share of profit, $0.03 above expectations on a better than 7% year-over-year increase in sales. New home orders were up 19% from the same period a year ago, so revenue growth should see a boost in the quarters ahead. The stock is still cheap at 9x next year's projected earnings. I also to continue to like LGI Homes (LGIH) , which is even cheaper -- and reports quarterly numbers next week.
Eagle Pharmaceuticals (EGRX) rose some 20% in trading yesterday, and has held up very well despite the onslaught on the biotech and biopharma space over the past month. It announced yesterday that the Centers for Medicare & Medicaid Services has established a unique, product-specific billing code, or J-code, for its BENDEKA injection. The J-code will become effective on Jan. 1. This should help boost sales of this compound, which is marketed and distributed by partner Teva Pharmaceuticals (TEVA) .
Teva is doing a solid job in migrating users of Treanda to BENDEKA, as it is a more effective delivery system. Treanda was doing some $800 million in annual sales before BENDEKA was approved late in 2015. Eagle should receive between $600 million to $800 million from these sales in royalties over the next three years.
These are a few small cap names that are bucking the downward trend in their slice of the market, and given recent news, I expect them to continue to do so.