It is the time of the year that is full of optimism as we celebrate the end of another year. It is a season for the traditional “Santa Claus” rally and for pundits to offer up their best equity picks for the New Year.
The stock market delivered another year of double digit returns and almost all sectors, outside of energy and commodity stocks, did well. With the economy finally showing some signs of migrating to a higher growth plane after being stuck for over five years in the worst post recovery on record, investors have a reason to look forward to 2015 as well.
It is within that optimistic vein I offer up two attractive high risk/high reward stocks that could turn out to be market rockets in the upcoming year if everything falls right. Both can be had right now for less than the price of a “grande” coffee at Starbucks these days.
Let's start with a small biotech named Curis Inc. (Nasdaq: CRIS). Curis has a market capitalization just north of $100 million and focuses on oncology. The stock of Curis was selling at $3 a share before the huge sell-off that took down the entire biotech sector in March, especially small cap stocks. The stock spent most of the last six months in a relatively tight trading range and currently is selling at approximately $1.30 a share.
Curis has several traits I look for in a company before I make an investment in this inherently volatile space. First, it has one product already on the market with Erivedge. This compound is a first-in-class drug targeting the hedgehog pathway that was developed and is being commercialized by the firm's collaborators, Genentech in the United States and by Roche outside the u.s., for the treatment of advanced basal cell carcinoma. This form of skin cancer is one of the most prevalent types of cancers in the world.
Erivedge has already been approved in more than 50 countries, and Roche continues to pursue marketing approvals in many others. The company took in $1.8 million in royalty revenue in the third quarter; this is up from $1.1 million in the same quarter of last year. Revenues should continue to grow as this compound gains traction in more markets.
