Two leading growth stock expert, Brandon Clay, editor of Invest with an Edge, and Alexander Green, editor of The Oxford Club, turn to automated blood testing equipment maker Immucor (NASDAQ: BLUD) as a recession-resistant buy.
Clay suggest, "A good bet is to go with the strongest stock in that particular sector at the time of your pickThat way, the company you select at least has the momentum of the sector backing it. Typically the medical industry performs better than the overall market in a downturn. This recession has been no different.
"As we dug deeper into health care, one company surfaced that was worth our attention. Immucor is a blood testing equipment manufacturer specializing in pre-transfusion diagnostics.
"Established in 1982, they brought their first patent to market four years later. Since then they've become a leader in blood diagnostics and blood bank technology.
"In this niche field, they became known for developing the first FDA-approved full automation blood typing and antibody screening system.
"It may not be very exciting to a layman, but it's absolutely essential to a safe and efficient blood supply – a crucial component for any health care system.
"Immucor is a small-cap company. With a market capitalization around $2 billion, their annual revenues were $281.8 million last fiscal year. Quarterly year-over-year growth hovered around 7.3%, an impressive clip in this economy.
"With over $92 million in cash and $0 debt, Immucor is well positioned to thrive in a difficult market. Their primary competitor, Bio-Rad Laboratories, is not as concentrated in the blood diagnostics market. In fact, there is very little competition in this particular field.
"In January, Immucor released earnings for the quarter ending 11/30/08. Their fiscal profit rose by 7% based on higher prices and increased global sales. It was the company's best quarter ever.
"We see strong potential for a $34 stock, possibly higher as investors look for a good place to put cash to work.
"Fear is pervasive but not so strong investors can't see a trending stock and solid fundamentals. \If you're looking to profit from essential blood testing equipment with little competition, go with BLUD."
Meanwhile, Alex Green adds, "Every year, more than four million people in the United States need blood transfusions, according to the American Association of Blood Banks. Before you can do a successful transfusion, of course, you have to match the blood type. That requires testing.
"Seventy-five percent of U.S. pre-transfusion blood testing is done manually. That takes a long time. It's expensive. And the risk of mistakes is considerable.
"Immucor has state-of-the art technology, plenty of cash and little competition. In fact, it is part of a duopoly. Immucor's only competitor is OrthoClinical Diagnostics, a unit of Johnson & Johnson.
"In this case, the smaller company builds the better mousetraps. Immucor has more advanced technology, superior instruments and better throughput.
"Immucor recently reported a 7% increase in second-quarter profits on an 18% increase in revenue. Sales growth was driven by an increase in prices, volume and international sales. The company also increased its outlook for the rest of 2009.
'"Currently, 70% of Immucor's business comes from the United States, most of it from hospitals abandoning the old way of doing things: Sending blood samples to a lab where someone assesses each specimen by hand, one at a time.
"Immucor's system is faster, cheaper and more reliable. So expect cost-conscious hospitals and health clinics to do more business with Immucor in 2009, no matter what the economy does."
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