Attempting to speculate around earnings season can be tricky.
While three-quarters of S&P 500 companies have topped earnings expectations this quarter, dabbling on smaller companies can create a lot of challenges for the retail investor.
Sometimes, it’s best to wait and see how a company performed before diving into the stock.
But how do we know which stocks have the most upside following their earnings reports?
This proprietary system tells us when to buy, when to sell, and when to hold a stock by combining a blend of a stock’s PEG ratio and several proprietary metrics that help us assign a score to every profitable company.
The VQScore ranges from 0 to 4.9. Anything over a 4.0 sits in our “Strong Buy Zone.”
One of our top VQScore stocks to buy carries a perfect 4.9 score and still has roughly 100% upside over the next 12 months.
Let’s explore how the VQScore works – and how you can double your money in the year ahead.
Here’s the Top Pharma Stock to Buy in November
Founded in 2002, Vanda Pharmaceuticals Inc. (NASDAQ: VNDA) is an international biotech company that develops a broad range of medicines for conditions that don’t receive much attention.
Shares sank from a 52-week high of $33.44 earlier this year after an interesting spat with the U.S. Food and Drug Administration (FDA).
The company had wanted to advance one of its drugs, tradipitant, into human trials lasting longer than 12 weeks.
However, the FDA wanted the company to test the drugs on nonrodent animals. The agency was asking for a nine-month study in dogs to address the drug’s potential efficiency on humans.
Vanda Pharmaceuticals took a hardline stance against “unnecessary animal research.”
The markets did not like that stance, and the stock declined over the next year.
However, things have turned around at Vanda Pharmaceuticals starting with its earnings report released on Wednesday, Nov. 6…
The company reported strong advancements in its drug pipeline, a dramatic uptick in sales year over year, and several high-level appointments to its executive suite.
Shares popped more than 11.5% on Thursday after the firm reported earnings.
But I foresee a stock that is poised to climb as much as 100% over the next 12 months.
Strong Sales, Strong Forecasts, and Pipeline Progress
The company noted Wednesday that it saw a 21% increase in net product sales from its core products, Hetlioz and Fanapt, during the third quarter.
The firm reported net sales of $59.5 million for Q3 2019, up from the $49.1 million it saw last year. In addition, Vanda increased its cash position by nearly 20% to $299.6 million. This gives the firm a longer runway for more advanced treatments and trial programs.
Meanwhile, it reported progress on its phase 3 clinical study for Epione (tradipitant) in atopic dermatitis. With enrollment complete, the firm will likely report results in Q1 2020.
It also continues to work with the FDA to address the regulatory path of tradipitant as a treatment for gastroparesis. It will study the drug’s effectiveness on motion sickness in its phase 3 program later this year.
Finally, the firm has been working on a series of other high-impact drugs for jet lag disorder, Smith-Magenis syndrome, and delayed sleep phase disorder.
On the earnings front, the company reported a huge boom in net income…
Vanda reported net income of $100.4 million or $1.88 per share. That is a huge jump from the $7.2 million or $0.14 per share that it reported during the same quarter in 2018.
The firm concluded its call with strong guidance for the full year 2019 with a range of net sales between $215 million and $225 million.
And its targeted cash position of $275 million could fund further programs or be returned to shareholders.
Now Is the Time to Buy VNDA Stock
Vanda Pharmaceuticals is a rock star stock that blew earnings out of the water on Wednesday.
The question now is how much further it has to run over the next 12 months…
The stock’s 4.9 VQScore signals that it’s poised to break even higher now.
With positive momentum, a strong cash position, and accelerating program progress, VNDA stock could easily hit $29 in the year ahead.
Given that the stock began trading for $14.53 at the opening bell this morning, that price represents an appreciation of nearly 100%.
— Garrett Baldwin
Source: Money Morning