Category Archives: Nasdaq 100 Watch List

Below are the Nasdaq 100 companies that are within 10% of their respective 52-week lows. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and rigorous due diligence.

Symbol	Name	Trade	P/E	EPS	Yield	P/B	% from Low
CTRP	Ctrip.com International, Ltd.	$25.65	22.00	1.17	0	3.56	2.25%
BMC	BMC Software, Inc.	$35.59	14.58	2.44	0	4.06	4.30%
NTAP	NetApp, Inc.	$34.80	21.13	1.65	0	3.45	4.44%
QGEN	Qiagen N.V.	$13.74	24.98	0.55	0	1.26	5.29%
CHRW	C.H. Robinson Worldwide, Inc.	$66.13	25.73	2.57	1.70%	8.50	6.15%
NIHD	NII Holdings, Inc.	$23.41	13.21	1.77	0	1.20	6.47%
LIFE	Life Technologies	$37.65	19.76	1.91	0	1.50	6.66%
SIAL	Sigma-Aldrich Corporation	$60.01	16.67	3.60	1.10%	3.38	6.82%
BRCM	Broadcom Corporation	$32.81	19.75	1.66	1.00%	2.88	6.84%
MSFT	Microsoft Corporation	$25.31	9.20	2.75	3.00%	3.62	7.00%
RIMM	Research In Motion Limited	$18.46	3.37	5.48	0	0.98	8.34%
EXPD	Expeditors Int'l of Wash.	$42.84	23.67	1.81	1.10%	4.63	9.20%
SRCL	Stericycle, Inc.	$77.86	30.90	2.52	0	5.56	9.40%
HSIC	Henry Schein, Inc.	$60.97	16.01	3.81	0	2.21	9.76%
SYMC	Symantec Corporation	$16.20	18.43	0.88	0	2.62	9.76%
CA	CA Inc.	$20.47	12.01	1.70	0.90%	1.77	9.99%

Watch List Summary

In our ongoing review of the Nasdaq 100 Watch List, we have taken the stocks from our list of November 10, 2010 (found here) and have checked their performance one year later. The companies on that list are provided below with the closing prices from November 10, 2010 to November 9, 2011.

Symbol	Name	2010	2011	% Change
WCRX	Warner Chilcott plc	$20.89	$17.20	-17.66%
APOL	Apollo Group, Inc.	$36.84	$46.14	25.24%
TEVA	Teva Pharma.	$50.81	$40.58	-20.13%
ISRG	Intuitive Surgical, Inc.	$277.96	$429.28	54.44%
AMGN	Amgen Inc.	$54.93	$57.51	4.70%
			Average gain	9.32%
NDX	Nasdaq 100	2,187.74	2314.10	5.78%

The black line drawn in the month of February 2010 indicates the period when three of the five stocks had achieved annualized gains of at least 60% or more.  Taken as a whole, the entire portfolio achieved an annualized gain of nearly 40% near the middle of February 2010.  In the end, it was Apollo Group (APOL) and Intuitive Surgical (ISRG) that carried the top five to an average gain of 9.32% over the last year.  The top 5 beat out the Nasdaq 100 by 3.54%.

Below are the Nasdaq 100 companies that are within 15% of their respective 52-week lows. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and rigorous due diligence.

Symbol	Name	Price	P/E	EPS	Yield	P/B	% from Low
BMC	BMC Software, Inc.	35.97	14.74	2.44	0	4.02	3.28%
RIMM	Research In Motion Limited	18.97	3.46	5.48	0	0.99	4.63%
NIHD	NII Holdings, Inc.	23.83	13.48	1.77	0	1.28	4.79%
QGEN	Qiagen N.V.	13.81	25.11	0.55	0	1.24	5.82%
CHRW	C.H. Robinson Worldwide	68.72	26.74	2.57	1.70%	8.91	10.30%
MSFT	Microsoft Corporation	26.25	9.54	2.75	3.10%	3.76	10.99%
EXPD	Expeditors Int'l of Was	44.21	24.43	1.81	1.20%	5.03	12.69%
SIAL	Sigma-Aldrich Corporation	63.58	17.66	3.6	1.10%	3.59	13.17%
LIFE	Life Technologies	40.08	21.04	1.91	0	1.6	13.54%
ILMN	Illumina, Inc.	32.77	42.01	0.78	0	3.62	14.01%
FSLR	First Solar, Inc.	49.59	8.14	6.09	0	1.03	14.31%
MYL	Mylan Inc.	18.51	19.3	0.96	0	2.31	14.47%
VOD	Vodafone Group Plc	27.92	11.59	2.41	6.90%	1.02	14.85%

Watch List Summary

In our ongoing review of the Nasdaq 100 Watch List, we have taken the stocks from our list of November 10, 2010 (found here) and have checked their performance one year later. The companies on that list are provided below with the closing prices from November 10, 2010 to November 4, 2011.

Symbol	Company	2010		2011	change
WCRX	Warner Chilcott	20.89		17.01	-18.57%
APOL	Apollo Group	36.84		47.24	28.23%
TEVA	Teva Pharma	50.81		40.93	-19.44%
ISRG	Intuitive  Surgical	277.96		432.23	55.50%
AMGN	Amgen	54.93		55.17	0.44%
				Average return	9.23%
NDX	Nasdaq 100	2187.74		2356.32	7.71%

The black line drawn in the month of February 2010 indicates the period when three of the five stocks had achieved annualized gains of 60% or more.  Apollo Group (APOL) and Intuitive Surgical (ISRG) had annualized gains of nearly 80% in the period covered.  Taken as a whole, the entire portfolio achieved an annualized gain of nearly 40% near the middle of February 2010.  In the end, it was Apollo Group (APOL) and Intuitive Surgical (ISRG) that carried the top five to an average gain of 9.23% over the last year.  The top 5 narrowly beat out the Nasdaq 100 by 1.52%, which is fine by us.

Below are the Nasdaq 100 companies that are within 20% of their respective 52-week lows. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and rigorous due diligence.

Although Akamai has a lot of cash, potential growth in foreign markets, generally lower rate of customer turnover, which could contribute to the company’s growth going forward, we believe it is worth considering Akamai from a Dow Theory perspective for any upside potential that might remain for the company. According to Dow Theory, so far the average price paid by investors, as opposed to speculators, is $36.45. This indicates the point at which an investor, over the last year, considers to be the "fair value". This implies that the stock, at maximum could gain nearly 52% in due time. However, taking into account Charles H. Dow’s claim that in a bear markets, investors should only expect half of what would be considered “fair value” in a bull market, we think that in the next year Akamai could rise to the $30.15 level before faltering. We have acquired share of Akamai with the expectation that the stock will decline by at least 50%, at which point we will reconsider buying additional shares.

In our ongoing review of the Nasdaq 100 Watch List, we have taken the stocks from our list of October 23, 2009 (found here) and have checked their performance two years later. The companies on that list are provided below with the closing prices from October 23, 2009 to October 21, 2011.

-	-	2009	2011	change
SRCL	Stericycle	53.17	84.04	58.06%
GILD	Gilead	43.83	41.47	-5.38%
GENZ	Genzyme	54.5	76.25	39.91%
CEPH	Cephalon	54.02	81.49	50.85%
BIIB	Biogen	43.81	108.84	148.44%
-	-	-	Average change:	58.37%
-	-	-	-	-
^NDX	Nasdaq 100	1735.63	2306.29	32.88%

This is a particularly fascinating performance review because of the high performance of the stocks as compared to the Nasdaq 100 Index. On average, the stocks from October 23, 2009 list exceeded the Nasdaq 100 Index by 25.49%. Two of the companies have already been acquired (CEPH and GENZ) while SRCL and BIIB continue to outperform the Nasdaq 100 Index by a wide margin. The only stock that is severely lagging behind the index is Gilead Sciences (GILD) with a loss of -5.38% and a numbing -38.26% under-performance. Overall, we’re satisfied with the results of this watch list and encourage closer scrutiny of companies on our current list, there may be bargains to be had.

Below are the Nasdaq 100 companies that are within 10% of their respective 52-week lows. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and rigorous due diligence.

Symbol	Name	Price	P/E	EPS	Yield	P/B	% from Low
ILMN	Illumina, Inc.	27.18	31.39	0.87	0	4.25	0.00%
QGEN	Qiagen N.V.	12.65	23	0.55	0	1.21	0.16%
BMC	BMC Software, Inc.	36.98	14.61	2.53	0	4.39	1.01%
LIFE	Life Technologies Corp.	36.82	18.95	1.94	0	1.56	4.31%
TEVA	Teva Pharmaceutical	36.75	10.51	3.5	2.10%	1.41	5.00%
FSLR	First Solar, Inc.	59.74	10.18	5.87	0	1.52	7.29%
PAYX	Paychex, Inc.	27.11	18.44	1.47	4.70%	6.3	7.92%
VOD	Vodafone Group Plc	26.25	11.22	2.34	7.30%	1.01	7.98%
URBN	Urban Outfitters, Inc.	23.29	15.77	1.48	0	2.91	8.48%
GOOG	Google Inc.	515.12	18.58	27.72	0	3.19	8.90%
NFLX	Netflix, Inc.	117.21	29.74	3.94	0	19.38	8.90%
CTXS	Citrix Systems, Inc.	54.94	31.09	1.77	0	3.93	9.42%
FISV	Fiserv, Inc.	53.38	17.51	3.05	0	2.46	9.50%
VRSN	VeriSign, Inc.	29.69	6.62	4.49	0	N/A	9.96%
HSIC	Henry Schein, Inc.	61.09	16.25	3.76	0	2.21	9.97%

Below are the Nasdaq 100 companies that are within 5% of their respective 52-week lows. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and rigorous due diligence.

The following are companies we are tracking from our watch list  this week. First up is Illumina (ILMN) which was last on our watch list on December 19, 2009. After being on our list, Illumina (ILMN) rose 172% at its peak on July 4, 2011. Already ILMN has lost -45.17% since the high in July. While ILMN is still nearly 50% above the December 19, 2009 price, the possibility exists that all the gains that were made could disappear in short order. As an example, anyone who bought ILMN after June 4, 2010 is confronted with a loss. ILMN has a market cap of $5.18B. Levered free cash flow at $146.48 million and enterprise value at $4.75 billion. The stock has lost -47.52% since the high on July 6th and is currently trading at 4.65% above its 52-week low.

Paychex (PAYX) was on our new low watch list on August 15, 2010 when it was within 2% of the 52-week low. Subsequently, Paychex (PAYX) rose 35.80% in 7 months. Employment being what it is, PAYX is trading in a wide range exhibiting a strong base at around $25. According to Value Line, PAYX is trading 30% below the historical fair value. PAYX has no debt and is likely to be an acquisition target if the stock remains at the current price or lower. Already PAYX has fallen 22% from the high set on March 9th bringing the market cap down to $9.49 billion. Prior to 2008, PAYX had a 19-year history of increasing the dividend. Since 2008, the annual dividend has remained at $1.24. PAYX would be purchased at any price below $25.50.

Netflix (NFLX) is going through significant turmoil as reflected in the stock price. Since the high of $298.73, NFLX has plummeted to $129.36 or down -56%. The financials on NFLX are a moving target making it difficult to fully determine the company’s true value. However, the business model is compelling and warrants considerable review. NFLX has a market cap of $6.8 billion and enterprise value of $6.65 billion. After applying Edson Gould’s 1/3 speed resistance line, NFLX will become worth considering at $99.58 and below. A detailed analysis of Gould's speed resistance line applied to NFLX can be found here.

Expeditors International of Washington (EXPD) has fallen to within 2.98% of the 52-week low. According to Yahoo!Finance, EXPD provides logistics services which involves consolidation or forwarding air and ocean freight. EXPD is a highly efficient organization and is trading at 2006 prices as if the company hasn’t averaged earnings of $1.32 in last 4 years compared to average earnings of $0.66 in the period from 2002 to 2005. According to Value Line Investment Survey, EXPD is estimated to have cash flow of $2 for 2011. Historically, EXPD has traded at 25 times cash flow which suggests that the stock should be selling at a fair value of $50. EXPD has increased their dividend every year for the last 18 years.

The performance of our watch list after one year is to remind us of the possible outcome of investing in the stocks on our list. It is hoped that we can gain greater insight in the investing process and refine that process as we go along. Below is the performance of the top five stocks on our Nasdaq 100 watch list from September 17, 2010.

All of the top five stocks from last year achieved 25% returns by May 2011.  However, only Maxim Integrated (MXIM) was able to sustain it's price performance that was above the Nasdaq 100 throughout the year.  As a group, the top five fell short of the Nasdaq 100 by -0.40%.

Below are the Nasdaq 100 companies that are within 10% of their respective 52-week lows and ranked by highest dividend yield. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and thorough due diligence.

In our ongoing review of the Nasdaq 100 Watch List, we have taken the top five stocks on our list from August 15, 2010 and have checked their performance one year later. The top five companies on that list can be seen in the table below.

The top 5 companies on our list last year underperformed the Nasdaq 100 by a narrow margin.  However, in the chart above, you'll notice that all 5 stocks achieved 10% gains within 3 months (our ideal target for selling) of the August 15th posting,  If all the stocks were bought after the posting and sold on November 9, 2010, as noted above, the gains would have approximated nearly 66% annualized returns.  We cannot emphasis enough the value of selling stocks if a 10% gain is accomplished within a year while inside of a tax-deferred account.  As you can see, the year end results vastly differ from the gains that could have been made.

Below are the Nasdaq 100 companies that are within 20% of the 52-week low. This list is strictly for the purpose of researching whether or not the companies have viable business models. These companies are deemed highly speculative unless otherwise noted.

On February 3, 2011 in Barron’s magazine (article here), Doug Freedman of Gleacher & Co. upgraded his ratings of Micron Technology (MU) from Neutral to Buy. The justification for the ratings upgrade was that price-cutting within the respective industries for both companies was diminishing. At the time, Micron Technology was trading just short of the 52-week high at $10.89. Soon after the buy recommendation in early February, Micron Technology stock reached a peak of $11.61 by the middle of the month.

Fast-forward to June 24, 2011 in Barron’s magazine (article here), Freedman reiterates his buy rating of Micron Technology (MU). The reiteration of the buy recommendation comes after Micron’s stock fell to $7.39 per share or –32% since his original buy recommendation on February 3, 2011. Apparently there is a story not worth repeating that Freedman is sticking to regardless of the reality that such a story is not applicable to Micron (MU). Freedman’s initial buy rating came when the stock was within striking distance of a 52-week high. The idea of transitioning from a neutral rating to a buy rating at the high seemed illogical since it was based on the premise that the previous trajectory would continue unabated.

On June 27, 2011, the stock market trading for the Nasdaq 100 was ruled by the pre-market. What do we mean by the pre-market ruling the day? Well, with all of the volume that is created during the regular hours of trading, the most impact to stock prices occurs during the pre-market. On average, the pre-market trading moved the shares of Nasdaq 100 stocks by 96.95%. The regular hours of trading only impacted market gains by 3.05%.

In addition, the volume of the pre-market is dwarfed by the regular hours however there is little to show for all of the activity during the regular trading day. As an example, Apple (AAPL) had pre-market volume of 125,033 shares and a gain of $5.96. At the close of regular trading, AAPL closed at $5.69, only a 4% difference from the pre-market close. This 4% difference from the pre-market close occurred on 12 million shares of volume. 32% of the companies on the Nasdaq 100 had no change in price after the pre-market closing price was established. Micron Technology, which had 34 million shares traded, was among those companies that didn’t budge from the pre-market closing price. This activity is not relegated to just the Nasdaq 100 on June 27th, we’ve examined this topic at great length in the past at the following link.

On June 28, 2011, navigation device maker TomTom announced that expected earnings and sales would be cut for 2011. This resulted in a 26% decline in the share price of TomTom. Garmin (GRMN) was soon to follow the lead of TomTom falling by 3% in pre-market trading. Garmin was highlighted as one of the Nasdaq 100 stocks to watch when it was within 2% of the 52-week low on August 15, 2010.

With a gain of 19% in 10 months and the prospect of retracing back to the $29 level, selling Garmin now, if you haven’t done so already, shouldn’t be out of the question.

The price action of Akamai (AKAM) seems to be following in lock step the price movement from 2005 to 2008. In the period from 2005 to 2007 the stock of Akamai rose from $10 to as high as $59.15. The subsequent declining phase lasted from early 2007 to late 2008 and stopped at $9.29.

Where do we think that Akamai is in the current cycle of decline? The most recent high was registered at $54.12 on December 7, 2010. In the last cycle, the price of Akamai stock took a break from freefall by resting at the $25.88 level. If Akamai were to do exactly what occurred the last time around (on a percentage basis), then there should be a rebound to the Dow Theory 1/3 (red line) support line of $39.18.

In the last cycle, Akamai traded in a Dow Theory line formation two times as investors and traders decided which position held the strongest hand. The first time occurred in 2006. It only took investors four months to decide that the stronger hands were the accumulators of Akamai stock. The second time a Dow Theory line started was in mid-2007. After a year of struggle it was finally determined that the distributors of Akamai stock had the strongest hand.

If we’re lucky, with Akamai (AKAM) continuously falling to a new low, the recent reversal in the stock price could ignite a price rise back to the 1/3 (red line) Dow Theory resistance level of $39.18. Akamai’s stock price getting above $31.71 (yellow line) represents fair value, a significant marker in terms of Dow Theory since it indicates where a majority of investors, as opposed to speculators, have gains in their AKAM position instead of loses. This gives less incentive to the investors to sell their stock.

As in the last cycle for Akamai, the strongest resistance level is at the $39/$40 level. Dow Theory stipulates that an investor should only expect half of what is foreseeable down the road. Since $39.18 (red line) is the foreseeable prospect for AKAM, if the price is now $35, then a fair profit could only be 5.97% or a gain of $2.09. Trite as this may seem, it is the only reasonable expectation for the stock in the short term.

The downside target for Akamai (AKAM), according to Dow Theory, is $24.24 (green line). In the past, AKAM has shown the ability to break through this support levels on downside moves in resounding fashion. Those interested in taking new positions should be willing to accept the downside risks beforehand.

It was reported on June 30, 2011 that First Solar (FSLR) received $4.49 billion in conditional loan guarantees from the Department of Energy. This news pushed the price of FSLR up 6% in after hours trading.

As the above chart indicates, First Solar (FSLR) appeared on our watch list several times at opportune prices. On February 26, 2010, FSLR appeared on our watch list when the stock price was within 7% of a new low. After a brief rise in the price of FSLR low in February, the stock re-appeared on our May 22, 2010 watch list falling within 16% of the 52-week low. More recently, FSLR showed up on our watch list when the stock came within 7% of the new low on June 17, 2011.

Only two companies, Dell (DELL) and Qualcomm (QCOM), from our July 2010 watch list were able to beat the Nasdaq 100.  The average gain for the top 5 companies was 20.09% which was far below the 36.20% gain for the Nasdaq 100.  Apollo Group (APOL) provided a surprising gain of 11.32% in an extremely challenging environment for companies in the for-profit education business. Research In Motion (RIMM) not only was at a new low last year, it fell another -40%.  It seems that RIMM is going in a death spiral since few companies on our watch lists are near their two consecutive years in a row, let alone falling an additional -40%.  Despite the plummeting of the shares of RIMM, it should be noted that the stock rose 40% by March 2011 after showing up on our list last year.  

Below are the Nasdaq 100 companies that are within 20% of the 52-week low. This list is strictly for the purpose of researching whether or not the companies have viable business models. Although these companies are very risky, they provide significant opportunity to outperform the market in the coming year.

The performance of our watch list after one year is to remind us of the possible outcome of investing in the stocks on our list.  It is hoped that we can gain greater insight in the investing process and refine that process as we go along. 

Below is the performance of the top five stocks on our Nasdaq 100 watch list from June 6, 2010 of last year.

As a group, the top five from our list last year did fairly well by exceeding the index by more than 5%.  The only stock to decline was Apollo (APOL). Qualcomm (QCOM) was clearly the standout in the performance ranking of our watch list.  Likewise, Electronic Arts (ERTS) managed to crank out returns just north of 50% in the last year. 

It is important to note that, at the time, these stocks were not favored very highly in terms of expected growth of the stock price.  In fact, as our watch list was being posted in June 2010, many Wall Street analysts were actively downgrading these stocks.  Considering that the entire list from last year gained an average return of 21.51%, the outcome was quite reasonable.

    

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Symbol	Name	Price	P/E	EPS	Yield	P/B	% from low
SPLS	Staples, Inc.	$16.37	13.53	1.21	2.40%	1.72	0.00%
CSCO	Cisco Systems, Inc.	$16.53	12.9	1.28	1.40%	1.94	1.16%
RIMM	Research In Motion	$43.52	6.86	6.34	0.00%	2.58	2.33%
MRVL	Marvell Technology	$14.34	10.7	1.34	0.00%	1.72	3.39%
MSFT	Microsoft Corp.	$24.49	9.73	2.52	2.60%	3.9	7.74%
AKAM	Akamai Tech.	$34.20	36.19	0.95	0.00%	2.76	8.30%
URBN	Urban Outfitters	$31.51	20.65	1.53	0.00%	3.96	8.54%
TEVA	Teva Pharmaceutical	$49.87	13.41	3.72	1.60%	1.94	11.17%
BRCM	Broadcom Corp.	$33.51	16.91	1.98	1.10%	3.12	12.07%
ATVI	Activision	$11.60	26.85	0.43	1.40%	1.32	15.88%
INFY	Infosys	$62.91	24.01	2.62	0.70%	5.85	18.07%
QGEN	Qiagen	$20.05	34.57	0.58	0.00%	1.87	18.92%

Symbol	Name	2010	2011	gain/loss
GILD	Gilead Sciences	36.57	40.98	12.06%
RYAAY	Ryanair	23.14	30.02	29.73%
QCOM	QUALCOMM	35.89	57.38	59.88%
ATVI	Activision	10.24	11.6	13.28%
GENZ	Genzyme	49.41	acquired	51.02%
Average gain				33.19%
^NDX	Nasdaq 100	1822.77	2351.43	29.00%

We're on the side of Barron's.  As a price war breaks out, the earnings will be lower than expected and that will translate in a decline in the stock price.  We'll check back a year from now to see what the performance of the cigarette manufacturers look like.

Below are the Nasdaq 100 companies that are within 19% of the 52-week low. This list is strictly for the purpose of researching whether or not the companies have viable business models. Although these companies are very risky, they provide significant opportunity to outperform the market in the coming year.

The deck has been reshuffled since our last Nasdaq list from April 15th.  New to our list are RIMM (RIMM) and Activision (ATVI).  There are five companies that are no long on our watch list.  Those five companies are Intel (INTC), Staples (SPLS), Infosys (INFY), Celgene (CELG) and Qiagen (QGEN).  Are these the next over-performing stocks for the coming year?  We're not sure but, technically speaking, the downside targets for these stocks are as follows:

The companies on our Watch List from a year ago did not hammer out any kind of investment performance to speak of.  Only two of the six companies did well, Qualcomm (QCOM) which rose 48.86% and Genzyme (GENZ) which got bought by SanofiAventis (SNY) for $74 a share.  As a group, the average gain was only 6.81% while the Nasdaq 100 Index rose 15.67% in the same one year period.

Below are the Nasdaq 100 companies that are within 21% of the 52-week low. This list is strictly for the purpose of researching whether or not the companies have viable business models. Although theses companies are very risky, they provide significant opportunity to outperform the market in the coming year.

In our review of the Nasdaq 100 Watch List from April 18, 2010, we found that only one company, Genzyme (GENZ), actually outperformed the Nasdaq 100 index.  The remaining 4 companies on the watch list averaged a loss of -0.56%.  When Genzyme (GENZ) is included with the performance of the stocks from last year, the group averaged a gain of 7.98%.

Below are the Nasdaq 100 companies that are within 26% of the 52-week low. This list is strictly for the purpose of researching whether or not the companies have viable business models. Although theses companies are very risky, they provide significant opportunity to outperform the market in the coming year.

On our last  Nasdaq 100 watch list, Cephalon (CEPH) was within 6% of the 52-week low.  This week, Cephalon was presented with an offer that seemed exceptional.  Valeant (VRX) announced that it was willing to offer a buyout of Cephalon at $73.  The market reaction to this was to push Cephalon above the offer price to $75.  At the same time, Valeant's stock price has jumped more than 15% indicating that the market feels that Cephalon could use a shake-up.  Our individual recommendation of Cephalon was issued on February 15, 2011 and can be found here. 

Also on our watch list from February 20, 2011, Celgene (CELG) has quietly crept 7% higher from where it once was.  According to Value Line dated January 14, 2011, Celegene has no debt, minimal increase of shares outstanding in the last three years, return on equity and return on capital are both in the high teens and book value that has grown over 11x since 2003.

Another company that we're watching closely is Amgen (AMGN).  The price of Amgen has vacillated in a narrowing range since 2008.   At the same time, Amgen has seen its shares outstanding decrease by 27.7% since 2002.  Amgen has very compelling financials which belies the lackluster performance in the stock price.

Our watch list from March 26, 2010 (found here) performed well considering that Apollo Group (APOL) has continued to fall due to closer scrutiny of Apollo's business practices.  Gilead Sciences (GILD) managed to decline -30% before coming full circle with a 1-year loss of "only" -7%.  The average gain for the whole group was 21.26% which was slightly ahead of the Nasdaq 100 index by 2.13%.

Below are the Nasdaq 100 companies that are within 20% of the 52-week low. This list is strictly for the purpose of researching whether or not the companies have viable business models. Although these companies are very risky, they provide significant opportunity to outperform the market in the coming year.

Watch List Insights

All things being equal, the number of shares outstanding affects the reported earnings of a company.  Some companies have no debt but they have increased the shares outstanding by a significant amount.  Ultimately, a company from 1994 with the same number of shares outstanding, or fewer, is a better value proposition as long as their debt hasn't increased at the same time. 

Below is the watch list with the percentage change in the shares and the year the data started from.  As you will note, companies like Amgen, Activision and Microsoft have decreased the number of shares outstanding.  Provided their debt position hasn't increased in the same time frame, they may be quality investment opportunities.

In our ongoing review of the Nasdaq 100 Watch List, we have taken the stocks from our list of March 6, 2010 (article here) and have checked their performance one year later. The companies on that list are provided below with the closing price for March 5, 2010 and March 4, 2011. 

Only three of the companies on our list managed to exceed the Nasdaq 100 while the other four on the list underperformed the index.  Stericycle (SRCL) was the biggest winner with a 55.19% gain.  Apollo Group (APOL) was the biggest loser over the last year with a decline of -29.01%.