In the corporate world, getting added to a major stock exchange is like receiving the Good Housekeeping Seal of Approval — the vetting process looks into all of the nooks and crannies. 

#-ad_banner-#If the exchange happens to be the granddaddy of all exchanges, the New York Stock Exchange, then it’s similar to having a spotlight shined in the hidden corners. Although the company could still have issues, being listed on the NYSE makes it clear that the company passed a fairly substantial due diligence process. Many stocks could not ever even hope of being traded on the NYSE — this is particularly true in the case of former OTC (over the counter) companies. 

It is indeed a joyful day for a company — not only does a NYSE listing lend credibility to a company, it provides gains in visibility and liquidity, which may reduce the cost of capital for the firm. In addition, studies have shown that after a move to the NYSE, merger and acquisition activity of a company increases. Generally, these are all positive factors for the stock price. 

And if being added to the NYSE is like getting the Good Housekeeping Seal of Approval, then being added to an index is like winning the lottery. Even being added to a little-known index will increase the positive press coverage and  ramp up investor interest. In addition, funds that follow the index are forced to add the company to their holdings. 

Combine the above two factors with the magic bullet of biotech success — a hot product in the pipeline — and it creates a compelling investment opportunity.

A former OTC stock, ImmunoCellular Therapeutics (NYSE: IMUC) was added to the NYSE last month and now it has been identified as a possible addition to the Russell Global, Russell 3000 and Russell Microcap Indexes. Final membership lists will be posted on June 25th. We will have to wait and see about the final Russell index inclusions, but the positive press ImmunoCellular has gotten as a result has shined a spotlight on a company most individual investors have never heard of. 

The California company’s main focus is on cancer treatment and diagnosis. Remember I mentioned a hot product? ImmunoCellular’s lead product candidate has biotech investors psyched. The drug ICT-107 is showing great promise in clinical studies, where it has been used to target glioblastoma, a cancer that manifests as malignant brain tumors. Today, glioblastoma has just a 5% survival rate over 5 years, but ICT-107 has proven effective in extending the lives of those afflicted by a significant factor. 

I don’t want to bore you with all the figures, so suffice it to say ImmunoCellular appears to be on the right track with this product. 

Looking at corporate growth, the company is on an upward trajectory. Starting with a market cap of just $50 million in early 2012, it now boasts a market cap of $137 million — and growing. Like most OTC stocks, there is a lot of float, and insider and institutional holdings are both minor (only 7% of the shares are held by insiders and 0.1% are held by institutions). After moving to the NYSE, and with a possible Russell inclusion in the future, these figures will likely increase. 

Risks to Consider: Biotech investing is risky, no matter how interesting a company looks. Everything rides on U.S. Food and Drug Administration approvals and study results. A close eye and tight stops need to be utilized whenever investing in this type of stock. 

Action to Take –> According to my criteria — plus the added bonuses I’ve detailed above — this stock looks like its screaming for a buy right now. There’s a lot more to dig into with this stock, but my target price for this stock is $6. If you want to wait for confirmation of strength, then $4 could be your entry point.