Stock Picks: Intercept Pharmaceuticals, AO Smith and Tenaris

By Dmitriy Gurkovskiy, Chief Analyst at RoboForex

The stocks are included herein by liquidity and fundamentals, as well as by insight and investment fund information.

Intercept Pharmaceuticals, Inc. (ICPT)

Founded in 200, Intercept Pharmaceuticals is a biopharmaceutical company focused on producing and promoting new therapeutic drugs in the US, Canada, and the EU. Its most popular drug is Obeticholic Acid (OCA) used to treat non-virus liver deseases, such as non-alcohol steatohepatitis, primary sclerosing cholangitis, and biliary atresia.

ICPT is a Healthcare (Biotechnology) company.

Large buy-outs made by the board is what attracts investor attention to this stock. Mark Pruzanski, the CEO, and three more shareholders bought over 407,000 shares in early last week, which equals over $26.07M.

The reason behind that was the secondary public offering that will allow to raise over $250M for Intercept. These funds are supposed to be invested into developing new drugs and promoting the existing ones.

Short Float is very high for ICPT (32,33%); key shareholders’ actions may scare the bears away from the market, with the share price probably rising. Another positive piece of news is Ms Miller Rich being appointed as Independent Director.

Miller Rich has over 35 years’ experience in healthcare, being also quite knowledgeable in business development and commercial strategies. She held a few manager positions in Merck & Co, and lately has worked as the Senior VP of Global Healthcare Business Development. The stakeholders expect largely positive results from Miller-Rich.

It is worth mentioning that there are many useful things in the world we know nothing about, while there are also many useless things that brought millions and billions of profit to their creators. It’s all about marketing.

The shareholders have now put their key stake into Obeticholic Acid (OCA) used for liver disease treatment. The drug has already been tested three times out of four, and everything the company now needs is just market it correctly for the consumers; this is actually Miller-Rich’s job.

There may be some risks of course, and anything may happen all of c sudden, but, as of now, the company is going to do very good with wth Obeticholic Acid.

Technically, the price is under the 200-day SMA, but the stock is range trading since October. There are some volume increases, showing that some people are taking positions. With this in mind, SMA breakout may lead to forming a new ascending trend.

Intercept Pharmaceuticals, Inc. (ICPT)

AO Smith Corporation (AOS)

AO Smith Corporation is a leading US hot water tankand boiler manufacturer. The largest boiler supplier in North America, it also supplies water processing equipment to Asia.
The company has got 24 offices worldwide, with five production units in North America.

The company falls into Industrial Goods (Industrial Electrical Equipment) category.

Chances are that most investors have never paid any attention to this company, as boiler production does not suppose any exciting news.

However, now is the moment for taking a closer look to it. Selling boilers is quite boring, right, but a $1B yearly profit does change the things a lot. Of course, this number did draw a lot of attention to AO Smith. This huge profits were maid chiefly in China, where household owners started massively buying boilers and water cleaning equipment. Since 2011, water cleaning unit sales rose from $35M to $250M, while this year AO Smith is looking for $400M. With millions of square meters appearing in residential zones in China every year, the demand for water processing units is likely to be steady. Currently, AO Smith is very secure in China and plans to reach the same results in India. Even as of now, the sales in India are $27M, which shows a very good potential.

Technically, there is an ascending trend, with the price below the 200-day SMA.

Since February, the price is inside a triangle pattern, which looks like a continuation one. The stock is currently trading near the lower boundary of the triangle, with the 200-day SMA acting as support. Once the level of $65 is broken out, the price may start rising further.

AO Smith Corporation (AOS)

AOS Short Float is quite low, 3.16%, which means there are very few bears among the investors. Meanwhile, the investment funds have increased their share by 0.44%, which makes the impressive total at 92.6%. We don’t always know the information behind it, but we can always analyze the actions taken by the funds; thus, here we can see the funds are very much interested in the company. Everything said above may mean that AOS will be uptrending long term, with the dividends amounting to $0.72 per share (1.15% of the invested amount) in Q1.

Tenaris SA (TS)

Tenaris is a large global producer and supplier of seamless and welded steel tubular products. it also supports and distributes its products for oil&gas, energy, and machinery companies.

The company falls into Industrial Goods (Metal Fabrication) category.

Tenaris became quite attractive mostly because of its Q1 earning report issued on March 31.

The report shows net sales gains rose by 17% compared to the previous quarter and by 62% compared to Q1 2017.

The EPS also rose drastically, by 45%, which boosted dividend gains to $0.82 per share, or 2.17% of the investment amount. This made the investors include such an attractive stock into their portfolios.

Sales boost is majorly explained with the crude oil production season in Canada, as well as with big pipeline supply to East Med.

Meanwhile, the never-ending Middle East conflicts support high crude prices, which makes it feasible to produce shale oil in the US. Thus, there is much activity in this area, and all this allows us to be sure that Tenaris goods are going to me in demand for at least a year more, which may further boost earnings and dividend gains.

The trade war led by Donald Trump, which includes customs duties on steel and aluminum, is giving another advantage to Tenaris. Meanwhile, the question of who is going to pay those duties is yet to be answered. The consumer companies then are forced to sign either short term contracts with foreign companies or long term ones with the domestic (US) companies.

Generally speaking, there is no more point in bringing in those duties now, as the uncertainly already gave its result. Trump may easily lift those sanctions later, with the contracts already signed and the foreign suppliers already having problems. It will take time for those foreign companies to establish their presence in the US market again; in the meantime, domestic companies will be doing good and attracting investors with the rising share price and dividend gains. Such companies include Tenaris as well.

Technically, there is an ascending trend, with the price below the 200-day SMA, ad the support at $35. With the resistance broken out at $38, the price may go further up to reach the next resistance at $50.

Meanwhile, short float for TS is 0%, meaning no one is looking for any bearish stuff here. The board members are meanwhile holding over 60% of shares, and not a single share has been sold lately. All this is an indirect signal for growth.

Tenaris SA (TS)

Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.

Featured image courtesy of Shutterstock. 

Having majored in both Social Psychology and Economics, I went on to continue my education in post graduate. Later I worked as a team lead of a tech and fundamental analysis lab in the Applied System Analysis Research Institute. This helped me to acquire all necessary skills and experience to become a successful trader and analyst, as well as a portfolio manager in an investment company. I'm a pro in the financial field and the author of articles for various international media. I also hold the position of Chief Analyst at RoboMarkets.