Joe Cotton: Stocks of the week are Longeveron and Upstart Holdings, “speculative” but promising
Market Valuation – As of Wednesday, April 20, 2022 at 11:20 a.m.:
Since our last post on March 26, the DOW Jones Industrial Average has paused and consolidated its gains, and yesterday it was strong and surprisingly rose 495 points to top that consolidation. And today it’s strong again – up 241 points to 35,152.34 at 11:20 a.m., and above its 200-day moving average (see red line) – a bullish event…unexpected in the face of the current negative news and headwinds such as: Galloping inflation, sharply rising interest rates, Covid and the war in Ukraine. Difficult to understand. But as they say “The trend is your friend”. .
Below, we present two “speculative” stocks:
The first Stock Pick is Longeveron, Inc. (LGVN) – is currently trading at $10.49 as of 11:22 a.m. on 04/20/22. It closed at $10.18 on Tuesday 4/19/22. It was one of the stock picks in our April 4 market letter at a price of $15.61. We bought it yesterday for $9.34…we thought it was a bargain.
What makes it interesting is that it contains an Alzheimer’s disease drug, Lomecel-B, which has completed a phase 1 trial and was found to be safe, and also appears to show improvement in some symptoms of Alzheimer’s disease.
In the study, each of the 33 patients received a single intravenous infusion of low or high dose Lomecel B, or a placebo. The study results are being tested in a new, larger Phase 2 study, which began in December 2021. The new trial is double-blind, randomized, and placebo-controlled, and is designed to evaluate single doses versus multiple doses of Lovecel-B for mild Alzheimer’s disease.
The second Stock Pick is Upstart Holdings, Inc. (UPST)– is currently trading at $80.84 as of 11:26 a.m. on 4/20/22. Upstart is an artificial intelligence (AI) company that has built an algorithm to improve the consumer loan process. Typically, when financial institutions assess potential borrowers, they consider their repayment history, income, assets, and current debts, which are measures partially represented by a FICO score…and may take days or weeks. But when Upstart’s algorithm assesses a borrower, it searches 1,600 data points to determine creditworthiness and provides an instant decision 70% of the time.
The company makes its money by lending the algorithm to its banking partners and receiving a commission each time it issues a loan. The company ventured into secured auto loans in late 2020 and in 2021 it acquired software company Prodigy and combined its sales platform with its lending system to create a software tool 2 in 1 for car dealers, Upstart Auto Retail, which dealers can now use to both sell cars to customers and offer them financing at the same time. Upstart considers the auto loan opportunity to be seven times larger than the unsecured lending segment.
Upstart went public with an IPO in December 2020 at $20 per share. It then climbed 2000% to $400 in October 2021 and then started its steep decline to around $75 in January this year. We consider it a solid growth stock sold at a bargain price. finance.yahoo.com shows he earned $1.43 per share and has a PE ratio of 55.69. They have 84.65 million shares outstanding and a free float of 72.15 million. Shares sold short are 13.82 million, or 18.87% of free float…a bullish factor if stocks start to rally again. Even though we consider it at a bargain price, we would only invest 50% of our allocated funds now and keep the rest in reserve to buy again if it drops to $50.
Joe Cotton has won three national stock picking contests with annual percentage gains over 96%. Its winner of the 2020 Wall Street Best Stocks competition was Inovio Pharmaceuticals (Symbol INO) with a 742% 1-year return.
This article is not investment advice and should not be construed as investment advice. For investment advice, consult a Registered Investment Advisor or Certified Financial Planner. Joe Cotton’s website is www.cottonstocks.net. Joseph W. Cotton of NKY is the publisher of the market newsletter, Cotton’s Technically Speaking. He is a graduate of Xavier University, a former bank manager and credit analyst, and a former registered investment representative of Fidelity Investments. Contact him at [email protected]