Market Assessment- As of Tuesday, February 15, 2022 at 6:29 a.m.
In our January 1, 2022 Market Assessment we listed 9 stocks that were vulnerable to a large decline — and decline they did: Within 30 days they all sold off strongly – Align (ALGN) was down 200 points; Intuitive Surgical (ISRG) down 100 points; ServiceNow (NOW) down 150 points; Google (GOOG) down 360 points and Amazon (AMZN) was down 534 points.
That being said, we believe that this is a Buying Opportunity for a large number of those former Darlings — those highly touted, “hot” trading stocks that have had large declines of 35-50% in the last 6 months – like Shopify (SHOP) 847.45, Coinbase (COIN) 195.25, Facebook (FB) 217.70, Intellia (NTLA) 88.91, Sunrun (RUN) 22.34, Airbnb (ABNB) 169.66, CrowdStrike (CRWD) 180.60, Netflix (NFLX) 396.57, etc., etc., etc.
Our “Stock of The Week” is Cassava Sciences, Inc. (SAVA) $48.70. This is a High Risk, High Reward stock that was my 2021 stock pick in the Wall Street’s Best Stock Contest.
It went from about $8 to $140 within 6 months. The reason for the big run-up was that the company had a drug candidate, Simufilam, currently in a 3rd Phase clinical trial that was shown to be effective in improving cognition in Alzheimer’s patients in the 2nd Phase trials. If the drug turns out to be effective, then we believe the stock could easily go to $200 a share, and maybe even to $300. We traded the stock and last bought it for 48.72 a share on 2/9/22.
What makes this stock even more interesting is that there are only 40+ million shares outstanding (per finance.yahoo.com) and the float is only 36+ million shares and there are 13.6 million shares short (35.87% of the float). This is a perfect candidate for a short squeeze.
There has been significant controversy surrounding the stock as of late. An attorney representing short sellers of the stock filed a Citizen’s Petition with the FDA in August of 2021 requesting that the clinical trial for Simufilam be stopped because of alleged fraud by the company in doctoring the results of the 2nd Phase trial. On February 10th, the company reported that the Citizen’s Petition had been denied by the FDA. B.Riley Securities maintained their Buy Rating on the stock on January 24, 2022.
Joe Cotton has won three National Stock Picking Contests with yearly percentage gains in excess of 96%. His 2020 Wall Street’s Best stock contest winner was Inovio Pharmaceuticals (Symbol INO) with a 742% 1-Year return.
This article is not investment advice, nor is it in any way to be construed as investment advice. For Investment Advice consult a Registered Investment Advisor or a Certified Financial Planner. Joe Cotton’s website is www.cottonstocks.net. NKY’s Joseph W. Cotton is publisher of the market newsletter, Cotton’s Technically Speaking. He is a graduate of Xavier University, a former bank manager and credit analyst, and a former Fidelity Investments registered investment representative. Contact him at cottonstocks@hotmail.com
