Three Winners Nobody Sees Coming: SAFM, CORT, SCLN

• StocksHQ: SCLN

   $4.83 +$0.32 +7.08%
 

• SAFM

   $50.13 +$0.14 +0.28%
 

• CORT

   $1.87 +$0.24 +14.72%

• 
  

• By James E. Burnley

• 
  

As nice as it would be to simply buy stocks that 'should go higher' and then let them increase in value, that's not the way the world works... especially in a bearish environment like the one we're in now. Sometimes, the smartest move is to simply identify names that are going higher - like Sanderson Farms, Inc. (NASDAQ:SAFM), Corcept Therapeutics Incorporated (NASDAQ:CORT), and SciClone Pharmaceuticals, Inc. (NASDAQ:SCLN)are right now - and step into those trends. And if it turns out those rising stocks actually deserve to move upward, so much the better. 

For Corcept Therapeutics Incorporated, the last five months have been nothing less than insane. Shares struggled coming out of 2011, hitting a ton of resistance until finally the bulls had enough and sent the stock tumbling from $3.40 to $2.50 in the span of two days. Just when things looked totally lost for CORT, the stock made a huge leap to $4.90 by mid-February. A revival? Not so fast. The stock tapered off again, hitting the $3.50 mark by late April, and casting a huge shadow of doubt again.

All that volatility is enough to shake the bears and the bulls off - and keep them off - indefinitely. That's the ironic part about the last five months though. Now that CORT has doled out some sickening volatility and spooked everyone, it's now starting to resume a longer-term uptrend. Check out this longer-term chart to see. Corcept Therapeutics is actually one of the leading small caps for the last three months, though nobody seems to care. To bad too, since the biotech firm is going to teeter on turning profitable near the end of 2013 and early 2014.

Speaking of biotech stocks on the move, SciClone Pharmaceuticals, Inc. may be in the red today, but if you can shrug off all the volatility, you'd actually find there's a nice uptrend underway here too. Indeed, not only is SCLN one of the top-performing small cap stocks for the last three months [even if only because of a big bullish gap in March], it's actually been one of the top-performing small caps for the last two years. Never mind the fact that nobody's cared to notice.

The question surrounding SCLN now is, can we expect more of the same bullishness going forward? The answer is, most likely, yes. See, SciClone Pharmaceuticals is one of those rare biotech names that is not only profitable, but very profitable. Pessimists are doubting the legitimacy of the projected P/E of 6.1 (and a trailing P/E of 10.8), but given a couple of years' worth of rising sales and profits, it's kind of hard to justify doubts any longer

Finally, if it has just been Sanderson Farms, Inc. making the list of top-performing small cap stocks for the last three months, it might have been dismissed as a fluke. To see its competitor Pilgrim's Pride also lead the way, however, underscores that the progress we're seeing from SAFM is the real deal, and backed by industry-wide support... or at least industry-wide optimism. 

Either way, one thing is clear - the stock's got some investment-worthy momentum.

But wasn't the processed meat industry in trouble a year ago when the price of chicken and cattle feed became too expensive to keep the meat industry profitable? Yes, it was, and SAFM as well as PPC both suffered fir it. That was than and this is now, however, and at a forward-looking P/E of 10.3 though, Sanderson Farms shares have proven the company's back in the sweet spot between decent consumer demand and affordable operations. That's a condition that could last a while too, making this name (not to mention Pilgrim's Pride and its forward-looking P/E of 6.9) a surprisingly-decent pick for the next few months. The slow-and-steady progress over the past year suggests the market is starting to see the same.

Source:smallcapnetwork