Obama Pick: StemCells Inc.

Posted Nov 5th 2008 3:15PM by Sheldon Liber
Filed under: Other Issues, Competitive Strategy, Money and Finance Today, Bargain Stocks, Presidential Elections, Intuitive Surgical Inc (ISRG), Obama Picks, StemCells Inc. (STEM)

It was only two weeks ago I posted about one of the stocks I own and follow closely Chasing Value: Intuitive Surgical Earnings -- what now?, a company that I consider an "Obama pick". My frequent readers know that the company is one of my older investments and one that has paid off handsomely. Although Intuitive Surgical Inc. (NASDAQ: ISRG) may still be a profitable investment at it's current level, at this point, it is well covered.

Searching for something less known, and certainly more controversial, I have the ideal Obama stock pick to add to your watchlist, StemCell Inc. (NASDA: STEM) which closed yesterday at $1.90. per share. It is not profitable, spends heavily on Research and Development and is highly speculative. So was ISRG when I got in very early.

The company profile states that STEM "discovers cell-based therapies to treat diseases of the central nervous system (CNS), such as cerebral palsy and Alzheimer's disease, as well as spinal cord injury. It is researching stem cell and progenitor cell (cells that have developed from stem cells) therapies to repair neural tissue damaged by disease and injury, and has discovered markers for CNS stem cells and a way to reproduce them for transplant."

STEM is not a new company, having been listed on the NASDAQ since 1992, but it's work has become all the rage in the past few years. The Bush administration has been opposed to stemcell research, however, California has been supportive of all biotech companies and I believe president elect Obama will be too.

The stock is volatile trading between $0.66 and and $2.28 over the past 52 weeks. The following story highlights some recent findings StemCells, Inc. Announces Preclinical Results Showing its Proprietary Human Neural Stem Cells Can Prevent Vision Loss. Perhaps a good entry point would be somewhere in the middle.

I cannot add this to my Chasing Value list because I honestly do not know how one would value a company that makes no profit, pays no dividend, and has few basic metrics by which to measure it. I can say that buying a little and/or adding it to your watch list is not a huge gamble. I certainly can name plenty of stocks that are bigger risks with less potential than StemCells, Inc.

My sources tell me that the company has strong management and the current pipeline is very promising but this is cutting edge stuff so how is one to know for sure?

Ironically it is people of faith that might be most opposed to this company's work, however, if you are going to invest in STEM that is exactly what you must have -- faith.

Update: Closing price $1.58, down -0.32 (-16.84%)

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of ISRG.

Tags: 110508, ISRG, Obama picks, obama stocks, ObamaPicks, ObamaStocks, Sheldon Liber, SheldonLiber, STEM, stem cell research, StemCellResearch, stemcells

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Reader Comments (Page 1 of 1)

11-05-2008 @ 4:28PM

Limoman said...

Sounded Good to me 6 mos ago and still does.. doubling my $ in it now..

not just because of Obama getting in, but It just might Discover something that could make it Billions.. and play a small , but important part of that..

Be nicer if it was Tax Deductable as a Chairty..

Thanks for the Heads up

11-12-2008 @ 12:10AM

Richard said...

Actually, you're wrong about Stem Cells Inc. being an Obama pick. There has been funding available federally for adult based stem cell therapies - exactly what Stem Cells Inc. uses. An Obama pick would be one that relies on his removal of the ban on federal funding restrictions for hESC therapies. Advanced Cell Technology would be a great example - Robert Lanza is one of the pioneers in the hESC field.

11-10-2008 @ 7:51PM

Sheldon L said...

Richard,

Thank you for adding your comments. The science and investing do not necessarily have a direct correlation.

Obama mentioned reversing President Bush's executive order on stem cell research over the week end and today STEM is up 30.81% by the close and another 3.09% in after hours trading.

A one day gain of 34% on the news is nothing to sneer at.

11-12-2008 @ 12:02PM

NJSwampdragon said...

Nice pick. It's down how much since you wrote about it only 7 days ago? Ouch

11-12-2008 @ 12:19PM

Sheldon L said...

NJS,

I did not say jump in with both feet. The stock is volatile and was up 40% as well on Monday. The range on this speculative stock is wild.

"Perhaps a good entry point would be somewhere in the middle."

To continue my transparency and following my own advice to buy somewhere in between the high and low I did exactly that.

I put in a GTC order that was filled today at $1.20.