by Jim Pearce

When we launched this service three years ago the world was in a very different place financially then it is now. China was walking back its ambitious growth projections, Europe was struggling with the Greek debt crisis and the United States was in the final phase of its massive Quantitative Easing program to avoid an economic meltdown. With interest rates near zero, investors were pumping money into the only stock market they could trust, and into stocks with the financial wherewithal to thrive in a challenging environment.

That’s why we put primary emphasis on U.S. large-cap stocks in the early days of BTP, as we felt there was too much risk in many of the smaller names. But we also provided a selection of smaller stocks for investors looking for outsized returns. For that reason we offered two portfolios to make clear the distinction between the two, so our readers could decide for themselves which to choose from.

But with economic growth accelerating and the promise of greater infrastructure spending on the horizon, we feel maintaining that separation is no longer necessary since stocks of all sizes are back in play. As hopefully many of you personally experienced, we realized some of our biggest returns this year in smaller companies such as Applied Optoelectronics (+138% in three months), Arista Networks (+61% in nine months) and Whitewave Foods (+38% in four months).

As we head into 2017 we are eliminating our Special Situations portfolio and moving those stocks into our Breakthrough Tech portfolio since at this point we see no clear distinction between the two anymore. We believe all of our recommended stocks are special, and all offer some form of breakthrough technology that will drive their share prices higher. We have one goal next year; to help you profit from exceptional investment opportunities fueled by breakthrough technology, and one portfolio to make sure you achieve it.

Buy AMAG Pharmaceuticals – Uncommon Remedies for Common Conditions

By Joe Duarte

Rationale for the trade: This stock offers a rare combination of technical – decreasing volatility in the face of rising money flow – and fundamental features – rapid revenue and sales growth rates, rising market share, and products with expandable labels.  Together they offer the opportunity for potentially sizeable gains in the next 3-6 months.

Let’s follow up on my recent Buy recommendation on AMAG Pharmaceuticals (NSDQ: AMAG), a biotech company focusing on improving treatments for common but serious diseases such as complications of pregnancy and anemia.  The stock is starting to show signs of accumulation and could deliver a significant intermediate term gain. 

Excellent Financials, Growth Prospects and Takeover Potential

While other biotech companies thankfully chase cures for terrible life threatening diseases which can be rare, AMAG is following a less beaten path – that of finding better medications for very common diseases.   It has three drugs on the market: Makena, Feraheme, and Mugard, all with expanding indications which are likely to improve revenues and earnings.    Its flagship drug is Makena, a hormone aptly named after a lush region of Maui, which reduces the chances premature births in women with a history of the event.  Makena has the pre-term birth market sewn up via its first to market FDA approval with a 41% market share, which it continues to expand.   AMAG is also working on a drug to treat pre-eclampsia –Digibind- a condition that can occur late in pregnancy with potentially fatal complications for mother and child if left untreated.  If this second drug works out AMAG will have a significant presence in the prenatal market and could be a takeover target for growth hungry big Pharma companies. 

Its November (3Q) was its fifth straight quarter of revenue and sales growth and delivered a huge beat of expectations – with revenues sporting 50% YOY growth – $4.8 million above expectations – and earnings outpacing expectations as well.  The company, which had $305 million in cash on its balance sheet,  is now guiding its Q4 earnings toward the upper end of the range.   The company will be filing a new drug application in early 2017 for an improved injector for Makena which will make the drug easier to administer by doctors as well as by patients.

Perhaps its most intriguing business line is its cord blood stem cell retrieval and storage business which allows parents to store their newborn’s stem cells straight from the umbilical cord and store it in case of future illness in the child which may respond to stem cell therapy.  The company markets this as an insurance policy for parents and the business is starting to catch on.   Its iron deficiency anemia product, Feraheme, is approved for use in patients with kidney disease. But the company is expecting FDA approval for use in the general population a fact which is likely to expand the market significantly. Buy AMAG Pharmaceuticals up to $38.

I have a position in AMAG.

Sell Seres Therapeutics

It’s time to close the books on Seres Therapeutics (NSDQ: MCRB). The stock has never recovered from its disastrous clinical trial failure in August.  The bright side is that the loss offers an opportunity to offset the many other gains we have had throughout the year.

Season’s Greetings to all.