Last week's Value Line update included biotechnology stocks. One stock caught my attention and that was Questcor. I kind of wish I knew about it a year ago but, alas, I didn't. The financials look rock solid. Growth looks nice. Has a PEG of only .44. Earnings projected to go from 4.25 this year to 5.50 next year. Pays a small dividend.
They seem to be a one trick drug company but this drug has 19 different indications.
It looks like the shorts have declared war on this stock at the moment. Stock has about a 55million share float with about 10 million shorted, down from 11.59 million last year (so appears some shorts are closing their position). Personally I like looking at short attacks for opportunities. This isn't to say that all short attacks do not have valid reasons. But sometimes they are grounded in manipulation than in validity. And sometimes they are flat out wrong (just ask Ackman with Herbalife).
When I saw BBEP get knocked to under $15 I acted and added. I know the stock. Owned it since 2009. It is a real company so I saw silly market over reaction because of one guy's off hand comment during his attack on LINE.
Now with QCOR it deserved to take a hit when Aetna pulled coverage for their drug. But the company has survived that hit and has been steadily growing their earnings. And with 20% short eventually they will need to cover and move on should the company continue to grow its earnings.
So with the above said, I am eyeing selling April 2014 $40 puts bid/ask 6.60/7 or the January 2015 $40 puts 10/10.90. They have January 2016 ones at 12/13.70 but the extra premium over the January 2015 ones doesn't seem enough for the extra year.
If anyone has any opinions regarding the above I would appreciate it.