There were a few stocks in 2008 that exhibited great performance despite horrible market conditions. And these gems of 2008 may provide investors with a safe haven of sorts for 2009.
In fact, we are already hearing analysis of the year to come suggesting that biotechnology stocks will be the place to be for positive returns in the new year.
One such name to consider is Amgen (NASDAQ: AMGN).
Founded in 1980, AMGN is one of the largest biotechnology companies in the market. It has a stable of proven drugs that provides significant profits, and a pipeline of opportunities that should provide reasonable growth in the future.
Shares of AMGN have gained approximately 20% during the last year as investors recognized the value of current profits combined with future growth. Interestingly, the company really gained traction during the second half of the year as the rest of the market was imploding.
Even with the gains, AMGN is a compelling investment story.
Shares trade for 15 times trailing earnings and only 12 times forward earnings. That means you can buy shares for a price-to-earnings ratio that is lower than its growth rate.
One reason for the optimism in the stock in 2008 was the progress made on its osteoporosis drug, Denosumab. Analysts are expecting the drug to be a blockbuster.
Denosumab has done well in trials, and AMGN recently applied for FDA approval to bring the drug to market. Given the expected 10-month FDA review and processing period, AMGN is only a year or so away from the sales benefits of this new drug.
In 2007, treatments for osteoporosis topped $8.9 billion. Depending on how much of the market is captured, sales growth at the company can be expected to be in the 10%-20% range once the drug is approved. That's not bad.
With an aging population, the need for innovative drugs and treatments will be one of the few growth areas in the near term. With an economy that may struggle in 2009, our appetite for drugs should not abate.
As an investor, you want to own growth cheaply, and that is what AMGN is offering at the moment. In a normal market, this stock would have a 20 or higher P/E ratio.
I would be a buyer today as I'm anticipating AMGN to be one of the few stocks justifying valuation expansion.
Louis Navellier's PortfolioGrader Pro, which offers free ratings for nearly 5,000 Wall Street stocks, rates AMGN an A, or strong buy.
Jamie Dlugosch is a contributor to NavellierGrowth.com.
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Reader Comments (Page 1 of 1)
12-31-2008 @ 12:31AM
SeismicStockTrading said...
I agree that AMGN could be an excellent performing stock. However, I think the timing might be a bit early. I am a technical trader and it looks to me like this stock could experience a 10% decline in the immediate future. It seems unstable at this time. (see SeismicStockTrading.com)