3 Stocks We’re Watching in the Fourth Quarter

We think this tech stock, biotech, and oil-field service giant might be near turning points, which is why we’ve got our eye on them this quarter.

As investors, we are a pretty optimistic bunch. However, we try not to let our optimism get the best of us by rushing out to buy stocks that seem to have untapped upside, because that approach can lead to poor returns. To avoid that fate, we like to watch stocks for a while to see if their catalysts start to play out before we jump in. This quarter, we have our eyes on Fitbit (NYSE:FIT), Cempra (NASDAQ:CEMP), and National Oilwell Varco (NYSE:NOV)because while each has a potential catalyst or two just over the horizon, each offers the possibility of disappointment as well.

Fitbit: Lots of activity for the activity tracker maker

Evan Niu, CFA (Fitbit): I’ve been keeping an eye on Fitbit for a while, as wearable technology has the potential to be a significant secular trend in the long term. The company has established itself as a leader in the wearables market, thanks largely to its basic fitness trackers. While multipurpose smartwatches should threaten to categorically cannibalize fitness trackers, in much the same way that smartphones cannibalized numerous categories like stand-alone music players or point-and-shoot cameras, that pattern hasn’t really played out in wearables market (yet).

But Fitbit continues to look more interesting, particularly in the fourth quarter. First of all, the company issued dreadful guidance in November due to a number of operational challenges. The company says it’s being conservative, which may leave some room for an upside surprise. On top of that, it just acquired the leftover assets of defunct smartwatch start-up Pebble. While it will take some time to see how the acquisition affects Fitbit’s product roadmap, it’s definitely been an interesting quarter thus far.

Shares are also trading near all-time lows, and the valuation looks pretty cheap. At a certain point, the valuation may become extremely compelling; the stock could deliver meaningful gains if investors pick up shares at the lows and if Fitbit is able to improve its execution. Of course, calling the bottom for any stock is a fool’s (lower case “f”) errand, but the cheaper Fitbit becomes, the more compelling it appears. That’s why Fitbit will be staying on my watchlist for the time being.

Woman Checking Fitness Wearable Device


Cempra has 2 big FDA decisions ahead

Brian Feroldi (Cempra): Clinical-stage biotech stocks often soar or collapse based on regulatory approval decisions. That’s why it is important for investors to keep a close eye on these companies as their FDA approval decision dates draw near.

One clinical-stage biotech stock with two FDA approval decisions coming up is Cempra. This company’s lead candidate, solithromycin, is seeking approval as a treatment for community-acquired bacterial pneumonia, or CABP. The company has submitted oral and IV versions of the drug for review and the FDA is set to issue their rulings on Dec. 27 and Dec. 28.

While solithromycin has some very real safety concerns to be worried about, the FDA’s vote could easily go either way. At the FDA’s advisory committee meeting, it managed to win a seven to six vote in favor of approval. The panel concluded that the drug’s efficacy outweighed its risks.

While that’s an extremely close vote, it is worth pointing out that there’s a serious need for new treatments options for CABP. More than 5 million cases of CABP are diagnosed each year in the U.S. alone, and antibiotic-resistant bacteria rates can exceed 50%.

Of course, this is the FDA we are talking about, so there are never any guarantees. That’s why I wouldn’t put real money behind Cempra just yet, but it’s certainly a stock worth paying close attention to this quarter.

National Oilwell Varco: Is a rebound around the corner?

Matt DiLallo (National Oilwell Varco): The past couple of years have been pretty rough for energy companies. Persistently weak crude prices forced producers to significantly cut capital spending, which sapped demand for oil field equipment. This led to a steady decline in National Oilwell Varco’s financial results:



That deterioration was supposed to stop last quarter, with the company guiding for a 10% increase in revenue due to large projects that it had booked earlier in the year as well an improvement in the company’s production-related business. Unfortunately, things did not go quite as planned. The company reported another 5% decline in revenue.

While the company’s management team did warn on last quarter’s conference call that revenue across most of its segments would be down in the fourth quarter, they also said that the industry was “at or near the bottom of an extraordinary down cycle.” Further, they saw several tailwinds starting to develop, which lead them to believe that a recovery was on the horizon.

Since providing that outlook, there have been several new positive developments including an OPEC agreement to cut production starting next year, and similar pledges from several non-member nations. These agreements, along with sinking crude supplies in the U.S. and healthy demand growth have pushed oil prices higher, causing producers to start putting rigs back to work. This improvement in the market could lead to stronger fourth-quarter sales for National Oilwell Varco as its customers restock their equipment inventory in anticipation of activity ramping up next year. If results do bounce off the bottom in the fourth quarter, National Oilwell’s stock could take off in 2017. However, if results continue to slide, they will likely take the stock with them.

Trump victory could spark greatest bull market in decades
We aren’t politicos here at The Motley Fool. But we know a great investing opportunity when we see one.

Our analysts spotted what could be a $1.6 trillion opportunity lurking in Donald Trump’s infrastructure plans. And given this team’s superb track record (more than tripling the market over the past decade*), you don’t want to miss what they found.

They’ve picked 11 stocks poised to profit from Trump’s first 100 days as president. History has shown that getting in early on a good idea can often pay big bucks – so don’t miss out on this moment.

Click here to get access to the full list!

*Stock Advisor returns as of January 3, 2017

Brian Feroldi has no position in any stocks mentioned. Evan Niu, CFA has no position in any stocks mentioned. Matt DiLallo owns shares of Fitbit and National Oilwell Varco. The Motley Fool owns shares of and recommends Fitbit and National Oilwell Varco. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


You May Also Like

NAIOP South Florida Appoints Officers, Executive Board and Board of Directors for 2022

NAIOP South Florida, a Commercial Real Estate Development Association offering advocacy, education and business opportunities to its members, has announced the following officers for the 2022 Board of Directors: President:

Pride Week Festival Begins With Tribute to Pulse Nightclub Survivor

Miami Beach Pride’s week-long festivities will commence with a special tribute to the LGBTQ+ community honoring the victims of the tragic shooting at Pulse Nightclub in Orlando. A ceremonial “flip

Surfside luxury condo sees notable sales

Arte at Surfside is making waves. There’s, of course, the news that Ivanka Trump and Jared Kushner are renting at the 16-resident luxury condominium. And there’s the December penthouse sale

Up in the Air: A Discussion

In a dynamic region where residents are typically on the move, everyone is wondering about the health of the airline industry and the safety of airports and airplanes. Everyone is

Other Posts

South Florida Yachting Legend Passes

Robert “Bob” Roscioli, an icon in the South Florida marine industry, has passed away. Many recognize the name Roscioli from the widely-successful and world-renowned Roscioli Yachting Center, a full service

Four key steps

[vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column width=”2/3″][vc_column_text] What a crazy time we are all experiencing. Right now, getting back to basics is most important. It is not and

Pandemic adds to worries about hurricane season

An above-normal 2020 Atlantic hurricane season is expected, according to forecasters with NOAA’s Climate Prediction Center, a division of the National Weather Service. The outlook predicts a 60% chance of

The difference between leading and managing

[vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column width=”2/3″][vc_column_text] Leadership and management are often misunderstood as one in the same. They are not. Certainly, a good leader should be able

Drew Limsky

Drew Limsky



Drew Limsky joined Lifestyle Media Group in August 2020 as Editor-in-Chief of South Florida Business & Wealth. His first issue of SFBW, October 2020, heralded a reimagined structure, with new content categories and a slew of fresh visual themes. “As sort of a cross between Forbes and Robb Report, with a dash of GQ and Vogue,” Limsky says, “SFBW reflects South Florida’s increasingly sophisticated and dynamic business and cultural landscape.”

Limsky, an avid traveler, swimmer and film buff who holds a law degree and Ph.D. from New York University, likes to say, “I’m a doctor, but I can’t operate—except on your brand.” He wrote his dissertation on the nonfiction work of Joan Didion. Prior to that, Limsky received his B.A. in English, summa cum laude, from Emory University and earned his M.A. in literature at American University in connection with a Masters Scholar Award fellowship.

Limsky came to SFBW at the apex of a storied career in journalism and publishing that includes six previous lead editorial roles, including for some of the world’s best-known brands. He served as global editor-in-chief of Lexus magazine, founding editor-in-chief of custom lifestyle magazines for Cadillac and Holland America Line, and was the founding editor-in-chief of Modern Luxury Interiors South Florida. He also was the executive editor for B2B magazines for Acura and Honda Financial Services, and he served as travel editor for Conde Nast. Magazines under Limsky’s editorship have garnered more than 75 industry awards.

He has also written for many of the country’s top newspapers and magazines, including The New York Times, Washington Post, Los Angeles Times, Miami Herald, Boston Globe, USA Today, Worth, Robb Report, Afar, Time Out New York, National Geographic Traveler, Men’s Journal, Ritz-Carlton, Elite Traveler, Florida Design, Metropolis and Architectural Digest Mexico. His other clients have included Four Seasons, Acqualina Resort & Residences, Yahoo!, American Airlines, Wynn, Douglas Elliman and Corcoran. As an adjunct assistant professor, Limsky has taught journalism, film and creative writing at the City University of New York, Pace University, American University and other colleges.