Multiple ways to win
Regeneron Pharmaceuticals (NASDAQ:REGN) continues to do what it does best: grow its revenue and profits at high rates. Last quarter, both of those metrics grew more than 20% thanks to the continued success of blockbuster drug Eylea. Yet shares of Regeneron have actually declined about 25% since the start of the year. What gives?
That disconnect can perhaps be blamed on the slow start for cholesterol-lowering drug Praluent. Many believe Praluent holds blockbuster potential, so with sales coming in at only $24 million last quarter, it's possible that this drug could be a dud.
However, I think it's too early to draw that conclusion. We don't yet know if using Praluent can lower the risk of cardiovascular events, but we should have that data in a few quarters. If clinical studies show that the drug reduces the risk of heart attack or stroke, then sales will likely soar.
While we wait for that data, Regeneron continues to make good progress with its pipeline. The FDA is set to rule on its potential rheumatoid arthritis drug, sarilumab, in October and its potential atopic dermatitis drug, dupilumab, in early 2017. Wall Street believes that each of these drugs could produce more than $1 billion in peak annual sales, so good news from the regulator would likely cause shares to spike.
In total, Regeneron could have four potential blockbuster drugs on the market within the next 12 months. That sets the company up for years of continued fast growth. With shares trading for 28 times next year's forecast earnings, I think right now is a great time to buy.
I love buying into winning restaurant concepts when they are small, so I've had my eye on Chuy's Holdings (NASDAQ:CHUY) for quite some time. This full-service Tex-Mex restaurant chain only has 77 locations, so it has plenty of room for rapid expansion.
However, a big growth runway only interests me if the company's existing stores are growing their sales, too -- and this is where Chuy's Holdings really shines. Same-store sales numbers have grown for 24 quarters in a row, which says a lot about the chain's popularity. If the company can keep that trend going in the years ahead, its future looks very bright.
However, despite those strong long-term growth prospects, Wall Street soured on the company after it recently projected comps growth of between zero and 1% for next quarter. The market knocked shares down so far that they're trading for about 24 times next year's estimated earnings. But given the company's long streak of comps growth, I'm willing to bet that next quarter's soft outlook is just a blip, not the start of a trend. That makes this company's stock a buy in my book.
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