Star Scientific (NASDAQ: STSI) Emerging Growth Stock Pick

Star Scientific (NASDAQ: STSI) Emerging Growth Stock Pick

Star Scientific (NASDAQ: STSI) Emerging Growth Stock Pick

Star Scientific (NASDAQ: STSI) Emerging Growth Stock Pick

Star Scientific (NASDAQ: STSI) has a market cap of $444 million and is involved in the manufacture, distribution, and sale of consumer products, dietary supplements, and dissolvable tobacco. The company has a bunch of mega-cap competitors with Philip Morris (NYSE: PM) (market cap $144bln), Altria (NYSE: MO) ($65bln), Reynolds American (NYSE: RAI) ($24bln) and Lorillard (NYSE: LO) ($15.26bln). Star Scientific announced a couple of months back that it was getting out of the smokeless tobacco business and focusing instead on hawking dietary supplements. The stock dropped to a 52-week low in November of $1.56, but has seen a significant rise and is currently trading at $2.65 (52-week range is $1.56 – $5.05). This coincidentally matches the same time when institutional funds began completing 13F filings. In the latest filing, net institutional purchases totaled approximately 13 million shares. This represents roughly 9.3% of the company’s current float of 140 million shares. On December 14th the stock had a short Interest of 29.5 million, close to an all-time high and representing about 18% of the 165.8 million shares outstanding.

The stock has seen a plethora of institutional buying and a fast appreciation in price from November’s low. In the past, much of the company’s performance was based on its success winning lawsuits against the major tobacco companies for product infringement. Now, there are other catalysts expected to drive the stock within the next few weeks. In the near future there is going to be a release of the Johns Hopkins Third Party CRO results testing humans for its Thyroid treatment using Star Scientific’s Anatabloc Technology. Of greatest importance of course is if the Thyroid results are positive, as this will be the first time an autoimmune disease has been put into remission. If Star’s Anatabloc Technology can treat or cure one autoimmune disease, in this case “Hashimoto” Thyroiditis, then there is no reason to think it cannot help cure other autoimmune diseases such as Diabetes, Rosacea and Alzheimer’s.

Clearly this is not just a catalyst but also a ground-breaking event as the possibilities of the technology are endless and can significantly advance the medical industry against these aforementioned diseases. The Thyroid research has been done by the Johns Hopkins University School of Medicine, one of the most preeminent medical institutions in the world, under the lead of Paul Ladenson, Hopkins Chief Endocrinologist.  It is widely believed that Dr. Ladenson will use of Anatabloc in Thyroid treatment and that Hopkins will continue to test this technology, and its efficacy on at least two or three diseases other than Thyroid.

If the technology is a success, sales of Star’s consumer product Anatabloc will rise significantly and have immediate effects on the company’s bottom line in the upcoming quarters. With any company that is experimenting with new technology and treatments there is some risk, however, the upside potential is tremendous considering that the stock trades at $2.65. Most options are more expensive than picking up some shares of STSI, which has the potential to revolutionize the industry.

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4 Responses

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  1. Meiko Acebo
    meikoacebo
    Jan 12, 2013 - 02:42 PM

    How much is the risk-reward ratio? Looks like a 3:1 for me. I like the catalyst and the pick up in institutional demand. Sounds like a blockbuster to me.

    Reply
  2. mrgambale@gmail.com
    Jan 13, 2013 - 08:58 PM

    The stock could provide some big returns, and is very cheap. May be worth a shot.

    Reply
  3. Lillie
    Jan 14, 2013 - 08:02 AM

    Sounds like the company is in the process of reinventing. Smart.

    Reply
  4. Tyokunbo Abiola
    Tyokunbo
    Jan 17, 2013 - 07:11 AM

    Sounds interesting. I always watch stocks with a plethora of institutional buying.

    Reply

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