Year's 10 Best- and Worst-Performing Stocks
Jan. 2 -- Investors will remember the 2000 market for the Internet meltdowns like CMGI (down a woeful 96 percent this year) and Akamai Technology (off 94 percent), but some may also look back and recall shimmering standouts like OSI Pharmaceuticals and Aeroflex, which rose a staggering 909 percent and 594 percent, respectively.
Health care dominates the list of the 10 best-performing stocks of 2000, with four biotechnology concerns, one medical equipment company and a clinical laboratory testing outfit.
Robert Toth, an analyst with Prudential Vector Healthcare, ascribes the biotech sector’s run-up to its maturity. “The early promise of biotech was realized for the first time in 2000,” Toth says. “Investors have much more confidence in the pipeline.”
Top performer OSI benefited after gaining the rights from Pfizer to an anticancer compound that could treat as many as 600 million patients with different types of cancer, including colorectal cancer, according to Toth. (He rates OSI a strong buy and his firm has done underwriting for the company.) He also estimates the potential size of the drug’s market at $7 billion to $10 billion in five to seven years.
Landing the Rights
Drugs were also good for Cell Therapeutics, the third-best performer with a 544 percent return. The biotech company acquired the rights to Trisenox, a treatment for patients who suffer from a severe form of leukemia, but which can also be effective in treating other types of cancer. In the pipeline is a version of Bristol-Myers Squibb’s cancer drug Taxol, which took in $1.5 billion worldwide in 1999.
Alan Auerbach, an analyst at First Security Van Kasper, expects the sector’s strength to continue. “There are a record number of drugs in clinical trials, and the number of companies turning profitable will increase by orders of magnitude,” Auerbach says.
Energy problems in the U.S. proved fortuitous for FuelCell Energy, No. 5 on the list, which enjoyed its 447 percent return because of the fundamental idea of “finding alternatives to the traditional electric utility grid,” says Sam Brothwell, an analyst with Merrill Lynch. (He rates FuelCell a buy, and his firm has done underwriting for the company.)
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