The S&P 500 is set to close the week with its best weekly gain in three months and has risen above the 1,400 level for the first time since May 2008. Perhaps March “triple witching” of expiring stock options, index options, and futures contracts is helping push stocks up. And investor cheer over the upcoming St. Patrick’s Day holiday isn’t hurting either.
Irish Companies Were Up the Most This Week
Big up days sometimes mark a change in industry-sector leadership. To determine which industry sectors may be coming into favor, I examined which individual stocks were this week’s biggest percentage winners. My stock screen filters out relatively low-priced stocks (i.e., under $20) because they often have large percentage moves for no reason other than that they’re illiquid.
Based on my research, three of the biggest winners last week were in the business software and biotech sectors. The one thing that two of the three winners had in common? — the luck of the Irish!
1. Velti plc (NasdaqGS: VELT)
This Dublin-based provider of mobile marketing services rose 33.3% this week on better-than expected fourth-quarter earnings. Wells Fargo upped its price target on the stock by more than 50% to a range between $17 and $19 per share. Even after this week’s run-up, the stock is still trading for only $13.67, 20% below the low end of Wells Fargo new price target range. The stock went public in January 2011 at a price of $12 and is still trading below its first-day closing price of $15.58.
2. Amarin plc (NasdaqGM: AMRN)
This Dublin-based biotech company has a very promising Phase III heart drug known as AMR-101. The drug is based on the beneficial Omega-3 fatty acids found in fish oil and has shown a “remarkable ability” to lower heart attack and stroke risk. The stock was up 29.3% this week on news that the U.S. Patent Office is moving closer to granting the drug U.S. patent protection. Leerink Swann, an investment bank boutique specializing in healthcare stocks, came out with an analyst note stating that the recent patent progress increases the chances that Amarin will be acquired by a larger pharmaceutical company. The FDA is scheduled to decide whether to approve AMR-101 by July 26th.
3. Guidewire Software (NYSE: GWRE)
Cloud computing is red-hot and this San Francisco-based company is right in the center of it. Guidewire provides web-based software services to the property & casualty insurance industry. The company went public this past January at $13 and is now trading for almost $32, making it the best-performing IPO of 2012. Its stock is up 41.0% this week on news that its second-quarter earnings of $0.16 per share blew away analyst estimates, which forecasted a $0.03 loss.
The insurance industry is “late to the party” of upgrading its software capabilities and needs to catch up fast with the rest of the financial services industry. Consequently Guidewire’s continued earnings growth seems assured for the foreseeable future. Guidewire CEO Marcus Ryu summed up the company’s second-quarter this way:
We continue to see momentum across all three of our main application offerings, including sales to both new and existing customers. We believe we are still in the early stages of property and casualty insurers replacing their decades-old software, and Guidewire is well positioned to respond to this growing demand with our integrated software suite of next-generation policy, billing and claims applications.