Monthly Stock Pick: Star Scientific Poised for Further Gains in 2012
Since markets have just completed their first half of 2012, it is important to make a broader assessment of which stocks are likely to see a strong performance for the remainder of the year. To do this accurately, we must first have an understanding of what the company has accomplished thus far in 2012, as well as the position it is in to continue strongly for the next six months. In addition to this, we must also have an understanding of the past and potential setbacks the company has faced, so that we can have some sense of the risks involved before any new investments are made. Only then can we make a proper assessment of whether the stock belongs in our portfolio.
This month, we will look at Star Scientific, which trades on the NASDAQ under the ticker symbol CIGX. CIGX has a wide variety of product offerings but they are most well-known for their tobacco curing business, which specializes in limiting the negative effects of typical tobacco by producing smokeless tobacco items. In addition to this, however, the company is also well-known in the dietary supplements space, with products like Anatabloc and CigRx. These supplement sales have been one of the key reasons Star Scientific has performed as well as it has in 2012, as the company continues to expand on sales revenues. So, how strong, exactly, has this performance actually been?
Star Scientific’s Performance Statistics in 2012
Looking at the numbers, Star Scientific (with its market cap of $708 million) has well-surpassed most analysts expectations, with gains of nearly 123% on the year. These gains have come on the heels of second quarter revenues, which posted strong results at $1.2 billion (which is quarterly revenue growth of 663% seen on a yearly basis). All of these impressive results have come with losses of only $5.2 million, and these statistics have been enough to impress investor sentiment.
In the past, Star Scientific has relied heavily on its alternative tobacco products because of the mammoth success of companies like Altria and Lorillard in generating revenue for similar products. Many analysts have suggested that Star Scientific could tap into this market and provide healthier alternative for consumers with previous health concerns.
But these characteristics have changed (or evolved) this year, with the addition of its dietary supplements products from Rock Creek Pharmaceuticals, and this product diversification is likely to help the company maintain (and improve upon) the stock price strength seen earlier this year. To help achieve this, Star Scientific has expanded its marketing campaign (tapping golder Fred Couples for endorsements) and strengthening its sales relationship with GNC stores to increase its product exposure in the retail markets.
Growth that has been as impressive as Star Scientific’s has been in 2012 cannot go unnoticed much longer, and for all of these reasons we expect to see additional upside in the companies stock price throughout the rest of the year.