2 to Buy & 1 to Sell After Earnings on Monday: Stratasys, Ltd. (SSYS), Santarus, Inc. (SNTS), Myriad Genetics, Inc. (MYGN)

Regardless of Performance this Stock is a “Must-Buy!”

In after-hours trading, shares of Santarus, Inc. (NASDAQ:SNTS) are trading higher by 8.84% on volume of 240.1k. This large pop came after the biotechnology company reported earnings that crushed Wall Street’s consensus. The Street was expecting revenue of $62 million, but the company reported $70.2 million, and then with its EPS of $0.08 it also beat expectations by $0.07 (take a minute to think about that). Therefore, this was one of the more impressive quarters of the earnings season.

The company’s 65% top-line growth is remarkable, and furthermore is its bottom line growth of 180% and its full-year EPS guidance between $0.92 and $1.00. This compares favorably to The Street’s expectations of just $0.70 and shows a continued strength in margin growth. As a result, this is a must-buy in biotechnology, a stock that is growing as fast as possible with a one-year return of 200%.

Even though the company is growing by more than 60% year-over-year, this is a stock that is trading with a price/sales of just 4.0 and a forward P/E ratio near 10.0 (after updated guidance). With that being said, I have no idea how the stock will trade on Tuesday. It is possible that it will open and trade flat or even lower, as stocks tend to trade illogical following earnings.

However, this is a stock that can’t appreciate fast enough to keep up with its fundamental growth, and was trading with after-hour gains of almost 9%. Even if the gains hold, I still think this is a “buy” and if it ticks lower I will buy on every dip, because this is a stock that is worth every bit of $20 and then some.

Conclusion

In my book, Taking Charge With Value Investing (McGraw-Hill), I examine human behavior and the psychological effects that take place in the minds of investors when a stock shoots higher or falls drastically lower (think roulette at a casino), with one scenario being earnings. For many investors, chasing these trends is common, even addicting, and very few are capable of realizing their losses because of their occasional gain.

Investors need to avoid this behavior after earnings, and look not at the performance of the stock but rather the performance of the quarter. By doing so, you will be able to find the inconsistencies and a distinction between performance and fundamentals, which creates value and allows for large returns.

The article 2 to Buy & 1 to Sell After Earnings on Monday originally appeared on Fool.com and is written by Brian Nichols.

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