The advisor explains, "Cepheid does genetic testing of the things that can make us sick or kill us. The company is at the forefront of the next generation of diagnostics testing, and has real products already on the market." Here is his review.
"Cepheid has had outrageous sales success in the past few quarters and, therefore, has excellent profits looming. However, the true value for the company is its long-term potential.
"CPHD broke out about a year ago with a new test for the killer staph infection, MRSA, and the test is an order-of-magnitude better than any the competition has.
"A combination of tremendous public pressure and a CDC report that said MRSA kills at least 17,000 people per annum (and consumes billions of dollars, already), have hospitals everywhere putting in MRSA screening and prevention programs. And nine out of 10 of those hospitals are buying CPHD's equipment and tests.
Buying only stocks announcing splits, Neil Macneale has developed a leading long-term track record. His latest buy in his 2-for-1 newsletter is biotechnology research products firm Invitrogen (NASDAQ: IVGN).
"Wow, investing today is like riding a ping-pong ball; last month I was feeling quite glum about the market and cautioned that we were in for an extended period of below normal portfolio growth.
"That may still be true, but now, as we go to press, the portfolio is at its all-time high and there is reason to believe most stocks we have picked are going to do much better than the overall market.
"Meanwhile, with splits so few and far between these days, one thing is certain; companies that do announce splits deserve a very close look. Our latest selection is Invitrogen. Its primary business is assembling and selling kits used in biotech research.
"I view this as selling the shovels and tents to the gold miners. During the California gold rush, it was the storekeepers that got rich while most of the miners went broke.
"IVGN is not ideal in that it pays no dividend and carries a moderate amount of debt. However, this is a strong business with a history of good earnings and good growth. The healthcare sector has been on the outs for a while now and it's probably a good time to get a biotech company into the portfolio."
Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.
A graph from the May 2008 issue of Harvard Business Review tells a story about the dumbing down of the global economy.
From an article, Rebuilding the R&D Engine in Big Pharma [subscription required] the graph shows the total shareholder returns for various industries in two time periods: from 1985 to 2000 and from 2001 to 2007. Here are three of the leading sectors from 1985 to 2000 (average annual shareholder returns are in parentheses):
Pharmaceuticals (20.0%)
Financials (18.8%)
IT (17.4%)
Between 2001 and 2007, three of the leading sectors were:
Two leading advisors with noted expertise in the biotech sector have both been long-term fans of Celgene (NASDAQ: CELG), both holding the stock in their respective model portfolios.
Nate Pile explains, "Now that the Pharmion merger is behind us, it appears that investors are once again recognizing Celgene for what it is – namely, one of the premier stories in the biopharmaceutical space.
"As I have said a number of times before, if I could only own one biotech stock for the next ten years, Celgene would be it... and I encourage you to make it a 'first choice' for your portfolio as well!
"The stock is likely to exhibit its usual volatility around the company's upcoming earnings report, but I encourage you to take advantage of any sell-off that may occur to aggressively add to your position in this market leader. CELG is now considered a strong buy under $60 and a buy under $68."
John McCamant states, "Celgene had some good news of late on the thalidomide front. The company has received approval of the application to expand the drug's label to treat newly diagnosed multiple myeloma (MM) patients in Australia.
"Carl Icahn - one of Wall Street's most renowned and successful investors - is on another mission; this pitbull is sinking his teeth into one of the companies in our portfolio - Enzon Pharmaceuticals (NASDAQ: ENZN)," notes Marc Lichtenfeld.
In Xcelerated Profits Report, the senior analyst and noted healthcare sector expert takes a look at the small cap biotechnology, which is involved in developing products for the treatment of cancer.
"With an infamous reputation for diving into stocks that he perceives as undervalued and shaking up management teams in order to boost shareholder value, Icahn us one of the best 'business partners' we could have.
"One of the big reasons why we recommended Enzon was because some major institutional investors are clamoring for change at the company. They contend that if Enzon was better at maximizing its true potential, the stock could easily vault from its current undervalued state and generate some real wealth for its shareholders.
Technical expert Leo Fasciocco seeks stocks that have broken out from technical basing patterns or those he feels are poised to make such a breakout, such as Gilead Sciences (NASDAQ: GILD), which has a "breakout level at $50."
The editor of Ticker Tape Digest explains, "Gilead Sciences, with annual revenues of $4.2 billion, makes therapies to treat life-threatening infectious diseases. It focuses on pulmonary and cardiovascular diseases.
"The company has four products -- Viread, Emtriva, combination pill Truvada, and triple combination Atripla -- in its HIV franchise, as well as Hepsera for hepatitis B. GILD recently received approval for pulmonary arterial hypertension drug Letairis, acquired from Myogen.
"The stock has climbed from $10 to $47 the past five years. It is one of the few stocks now that is knocking on the door of making a new high. With earnings growth to be solid this year and next, we see GILD in a good spot to be accumulated in anticipation of a breakout.
For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.
"The main reason to own ISIS is the strong potential for an extremely attractive partnership for their exciting anti-cholesterol drug candidate, mipomersen, or an outright acquisition of the company itself at a substantial premium.
"We have seen recent evidence of acceleration in deal activity as the Sanofi-Aventis/Regeneron deal was the richest we have ever seen for drug candidates only in Phase 1 testing. In turn, this has most likely upped the ante for doing a deal with ISIS for mipomersen, which is now in Phase 3.
"We believe that ISIS has the most attractive late-stage anti-cholesterol drug candidate in development and expect the stock to be much higher on a partnership or an acquisition.
"The strong data for mipomersen that was presented at the recent American Heart Association meeting -- which showed it had the stunning ability to reduce LDL (bad cholesterol) levels an additional 48% on top of statin therapy -- has cemented mipomersen as the one of the most valuable drug candidates in development.
For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.
"The company is focused on the development of new and improved treatments for various cancers and other severe, immune, inflammatory conditions, and is well on its way to becoming a major global biopharmaceutical entity.
"Over the years, we have watched management consistently deliver on its promises to shareholders and create additional value. The most notable cancer drugs at CELG are Thalidomide and Revlimid (a second-generation version of Thalidomide).
"These are oral therapies that have become the cornerstone in the treatment of multiple myeloma (MM), and which are in clinical development for many other blood-borne cancers, including non-Hodgkin's lymphoma (NHL) and CLL.
"While the stock has rebounded a bit from its August lows, we view this as a great opportunity to buy Amgen (NASDAQ: AMGN), one of the premier names in a key industry," says George Putnam.
In his The Turnaround Letter, he explains, "An interesting list of value investors, including David Dreman and Bill Miller, have accumulated the stock. We recommend joining them." Here is his review.
"Deriving its name from Applied Molecular Genetics, Amgen began in the early 1980s developing products based on advances in recombinant DNA and molecular biology. The company's Epogen and Neupogen products became the biotech industry's first two blockbuster therapies.
"Today, Amgen is the world's largest biotechnology company. From its IPO in 1984, the stock went on a 16-year run from a split adjusted $0.08 to over $80 by late 2000! But Amgen's revenue growth rate slowed following the turn of the century, and investors began lowering the premium they were willing to pay for the stock.
"More recently, investors were spooked by regulatory questions about two of the company's key drugs Epogen ($2.5 billion in 2006 sales) and Aranesp ($4.1 billion). As a result, in August the stock dropped below 50 for the first time since early 2003.
In referring to his recommended position in Cepheid (NASDAQ: CPHD), industry-leading biotech expert Michael Shulman jests, "To use a highly technical financial term: WooHoo! What a great quarter capped by a justifiably upbeat conference call."
Here, the editor of The ChangeWave Biotech Investor takes a look at the company, noting "I've been pounding the table for CPHD -- and this great quarter justifies my optimism."
"Cepheid develops and markets a diagnostic testing system called the GeneXpert that's a hardware platform for genetic tests of diseases that can be identified by their genetic code.
""There are several specific tests for this platform including MRSA, the killer staph infection that is typically found in hospitals, but is also spreading to other venues.
"In its latest quarrter, the company reported that revenues were $36.3 million, up 53% from Q3 2006. Total product sales were $34 million, up 50% and clinical product sales were $20.7 million, up 258%.
In its latest quarrter, the company reported that revenues were $36.3 million, up 53% from Q3 2006. Total product sales were $34 million, up 50% and clinical product sales were $20.7 million, up 258%.
"The GeneXpert system sales exploded! By the end of the quarter 1,376 GeneXpert System modules were installed in hospitals in the United States -- including 77 in VA hospitals, up by 51 modules in Q3 and representing a 79% share of the VA market.
"Genentech (NYSE: DNA), the world leader in cancer treatment, has been weak following its third quarter earnings report," notes biotech sector expert John McCamant.
In his The Medical Technology Stock Letter, he explains, "What we are seeing with DNA's stock represents an irrational overreaction by Wall Street, and one that should be taken advantage of by investors."
The advisor notes, "Starting with their earnings, DNA reported non-GAAP operating revenues of $2.91 billion, and U.S. product sales of $2.2 billion, for the third quarter. These figures represent an increase of 22% and 18%, respectively, over the same figures reported during last year's third quarter.
"As such, we are pleased with the growth that DNA has continued to produce. However, because revenue came in a little shy of analysts' consensus expectation, the stock has sold off. We would note one glaring positive which DNA just isn't getting much credit for anymore. That is, even at its already huge size, the company still expects to produce impressive growth for the full year (and in the years to come)."
Although he typically focuses on longer-term buy-and-hold positions, John McCamant has issued a trading buy for Amgen (NASDAQ: AMGN). He explains, "The stock has sold off so heavily, we now believe it is an attractive, shorter-term buy.
The editor of The Medical Technology Stock Letter explains, "When we see fire sales in the shares of individual biotech stocks, our interest always perks up. When it involves a company which just happens to have been a biotech bellweather for over two decades, we become significantly more intrigued."
He continues, "Amgen recently traded down to over four-year lows in response to a barrage of negative news flow. The investment community has punished the stock price, primarily because their Epogen franchise is under pressure from both competitors and government payers."
"The long-term outlook for biotech is excellent and many of today's undervalued companies will ended up looking like screaming bargains at today's prices," notes biotech expert John McCamant.
Says McCamant, "There may be no such thing as a pure safe haven within the equity markets. However, we believe the market for new drugs will continue to grow rapidly even if we enter into a difficult period for the economy."
He argues, "Quite simply, if an individual has to decide whether to buy a new TV or a new cancer drug, it is a safe assumption that they will chose the best drug possible. Additionally, with the continued aging of America, the demand for healthcare is poised for unprecedented growth."
As to Biogen, he explains, "We have long recommended the stock primarily for the significant growth opportunity Rituxan brings to the plate in treating autoimmune disease, most importantly rheumatoid arthritis (RA)."
The advisor notes, "Not only is it up a whopping 169%+ since I put it on the Buy List, it's also a hidden-value play -- more so than at any time in the past year. Simply put, Amylin is a great pick for patient investors."
Shulman continues, "Amylin no longer appears sexy or hot to some investors. It has a market cap north of $5 billion and its two newest drugs have been on the market for a couple of years, so the story on the stock appears to be over in terms of upside potential, right?
"Wrong," he exclaims. "Amylin is going to benefit in the coming months from a string of good news, beginning with the strong earnings it announced two weeks ago. The diabetes marketplace is exploding and Amylin is 'the' leading diabetes company."
"Without question, now is an excellent time to be acquiring shares of Genentech (NYSE: DNA)," says biotech industry expert John McCamant.
In his The Medical Technology Stock Letter, the advisor explains, "The company is unquestionably the premier player in cancer drug development."
The advisor states, "Despite the fact that the company has consistently produced outstanding earnings and revenue growth, and is on track to continue to do so, the Street had become more and more negative on the company." He notes that this skepticism is largely because the expected growth rate in future years is not going to be as robust as it has been to this point.
For example, he points out that earnings grew by over 75% in 2006 over 2005. However, he adds, in 2007, they are expected to grow by only 30% (over last year).
McCamant states, "Yes, that's right. We said only 30%. Further, merely 20% growth (roughly) is expected next year over the current year. Common sense should tell everyone that as companies get bigger and bigger, the growth rate is going to slow down."
A graph from the May 2008 issue of Harvard Business Review tells a story about the dumbing down of the global economy.
Technical expert 
"Our favorite speculative play for 2008 is 
For 25 years, Steven Halpern, editor of 
Comfort Zone Investing: Exploit volatility with constant dollar investing
Merck earnings preview: No miracles expected
Apple reports Monday -- buy AAPL before earnings?
