MILLBURN, N.J. (Stockpickr) -- 2011 is drawing to a close. While both professionals and do-it-yourself investors try to prognosticate the year ahead in advance, we're always dealt our fair share of surprises -- both good and bad.
With that in mind, let's take a look at the
of 2011, starting with the positive.
Also check out "
2012 Stock Predictions and Outlook
Overall, 2011 was not a good year for the biotech industry. The Amex Biotech Index has declined close to 20% so far in 2011. The Nasdaq Biotech Index and its corresponding ETF,
iShares Nasdaq Biotech Index ETF
, rose about 10% in the same period.
The difference in relative performance for those two indices was
, which represents approximately 11% of the Nasdaq Biotech Index but is not at all in the Amex Biotech Index. So it is fair to say that biotech ex-Pharmasset performed poorly in 2011.
According to the company's Web site, Pharmasset is "a clinical-stage pharmaceutical company committed to discovering, developing and commercializing novel drugs to treat viral infections. Our primary focus is on the development of oral therapeutics for the treatment of hepatitis C virus ('HCV'). We currently have three product candidates and a series of preclinical candidates nearing preparation for clinical development."
The key product for the company is its treatment for hepatitis C. On Nov. 21,
agreed to buy Pharmasset for $137 per share. At the time, the stock was selling for $72.67. Prior to that deal being announced, Pharmasset shares had risen 234% on the year. (It shows up on a list of
Pharmasset is definitely the woulda-coulda-shoulda stock of the year.
Ladenburg Thalman: +118%
is an old boutique investment bank / brokerage firm based out of Miami. Given its size, relative obscurity and low stock price, Ladenburg Thalman is overlooked in the investment world.
Worth noticing, however, is that after 12 consecutive losing quarters, Ladenburg Thalman posted breakeven results for the first and second quarter of this year. This was achieved on the back of record revenue generation for this firm. The stock rose 18% in the first half of 2011.
The company has made several small strategic acquisitions this year to help boost its future business. Insider buying has also helped to move the stock in the second half of 2011. What really helped the stock to climb was a series of announcements in early November when the company initiated a 5 million-share repurchase program in conjunction with its third-quarter earnings report.
Sturm Ruger: +118%
, which I highlighted in September as one of
-- manufactures guns and ammunition. This was a hot sector during 2008 and 2009 when people were buying guns during the recession and in fear that an Obama presidency would ban the sale of handguns. Of course, none of that became reality. Nevertheless, 2009 was a banner year for the company, but 2010 was flat.
Surprisingly, 2011 was another record year for Sturm Ruger, and 2012 is expected to be better. The company's operational strength even caught the analysts off-guard as year-to-date earnings of $1.55 beat consensus estimates by 33 cents. I hate to use this word, but the only way to describe Sturm Ruger's success was as a result of "execution."
Sturm Ruger is one of TheStreet Ratings'
and was featured last month in "
Domino's Pizza: +114%
is one stock that I was able to take advantage of in the second half of the year. In July, I was looking for
. Domino's had just reported its second-quarter results of 40 cents, which beat consensus analysts' estimates of 36 cents and were 21% greater than the prior year's quarter. Revenue of $384.9 million outpaced analysts' expectations by $8.1 million and grew 6.2% year over year. (Please note that the revenue growth may appear low due to an accounting allusion as one must consider that 26 units were sold to franchisees during the period, thus converting sales to franchise fees and distorting revenue growth in the process.) Domestic same-store sales rose 4.8%, and international same-store sales rose 7.4%. Finally, operating margins rose 100 basis points to 28.8%.
Domino's Pizza was also successfully reducing its debt for several quarters. My price target on the stock was set at $33, as I outlined in my newsletter
. The company continued to perform above expectations throughout the summer, finally made an all-time high in the fall and then peaked in early December at $35.30. I sold my shares at $34.75.
Domino's shows up on a recent list of
Cabot Oil & Gas: +101%
2011 was not a great year for the oil and gas business. The Oil Service Sector Index (OSX) has declined more than 10% so far in 2011. Natural gas prices remain weak and declined nearly 25% this year.
So why has
Cabot Oil & Gas
jumped 101% this year? It all comes down to shale -- and in particular the Marcellus Shale.
In the third quarter, Cabot Oil & Gas achieve a record production of natural gas in the Marcellus Shale in Susquehanna County, Pa. Capacity is expected to increase in the Marcellus Shale, so despite falling natural gas prices, total revenue and profit are expected to rise.
Clearly, the rise in the company's share price is more about speculation in the future than current operating results as the stock sells for 56 times earnings and pays a miniscule dividend.
Cabot was one of the
and shows up on a recent list of
To see these stocks in action, check out the
portfolio. And for the five biggest negative surprises of 2011, visit "
-- Written by Scott Rothbort in Millburn, N.J.
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At the time of publication, Rothbort had no positions in stocks mentioned, although positions can change at any time.
Scott Rothbort has over 25 years of experience in the financial services industry. He is the Founder and President of
, a registered investment advisor specializing in customized separate account management for high net worth individuals. In addition, he is the founder of
, an educational social networking site; and, publisher of
. Rothbort is also a Term Professor of Finance at Seton Hall University's Stillman School of Business, where he teaches courses in finance and economics. He is the Chief Market Strategist for The Stillman School of Business and the co-supervisor of the Center for Securities Trading and Analysis.
Mr. Rothbort is a regular contributor to
TheStreet.com's RealMoney Silver
website and has frequently appeared as a professional guest on
Fox Business Network
and local television. As an expert in the field of derivatives and exchange-traded funds (ETFs), he frequently speaks at industry conferences. He is an ETF advisory board member for the Information Management Network, a global organizer of institutional finance and investment conferences. In addition, he is widely quoted in interviews in the printed press and on the internet.
Mr. Rothbort founded LakeView Asset Management in 2002. Prior to that, since 1991, he worked at Merrill Lynch, where he held a wide variety of senior-level management positions, including Business Director for the Global Equity Derivative Department, Global Director for Equity Swaps Trading and Risk Management, and Director for secured funding and collateral management for the Global Capital Markets Group and Corporate Treasury. Prior to working at Merrill Lynch, within the financial services industry, he worked for County Nat West Securities and Morgan Stanley, where he had international assignments in Tokyo, Hong Kong and London. He began his career working at Price Waterhouse from 1982 to 1984.
Mr. Rothbort received an M.B.A., majoring in Finance and International Business from the Stern School of Business, New York University, in 1992, and a B.Sc. in Economics, majoring in Accounting, from the Wharton School of Business, University of Pennsylvania, in 1982. He is also a graduate of the prestigious Stuyvesant High School in New York City. Mr. Rothbort is married to Layni Horowitz Rothbort, a real estate attorney, and together they have five children.