The Iconoclast Investor

Yesterday I wrote a bit about Thoratec (THOR) and it’s one of the top names on my Watch List again.  I dropped it from sight a few weeks ago because of weakness, but the last couple of weeks have been exceptionally impressive.  The stock has rallied to new peaks!

Looking at the bigger picture, THOR’s pattern during the past few months has been a bit sloppy, but it found support at 19 three separate times during October and November.  Not coincidentally, 19 was the stock’s breakout level back in early August, when the firm had a coming out party of sorts, reporting sales and earnings up 44% and 122%, crushing expectations.

The third quarter report was another great one (sales and earnings up 44% and 325%, respectively), and last week brought the news that the firm’s HeartMate II heart pump is far superior for so-called destination therapy (permanent use, because the hearts aren’t suitable for transplants) than its older heart pump.  To this point, most of Thoratec’s business has come from patients awaiting transplants; this news could propel FDA approval of its pump for destination therapy, opening up a huge market.

After ripping higher more than 50% in just a couple of weeks, I’m not buying Thoratec here.  But if the market can confirm its nascent uptrend, and if THOR can tighten up for a few days, it could be well worth buying.