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Tuesday March 09, 2010
Nate Pile: A trio of biotech favorites
by Nate Pile, editor Nate's Notes
As it stands, despite all of the bearish sentiment we have seen in the market over the past four weeks, all five of the major indices I use to gauge the health of the overall market have (thus far) managed to weather the recent sell-off without breaking through their predetermined “bearish” eyebrow levels. In fact, one of them – the biotech index – is now actually trading above its bullish level! In addition, the newsletter’s Portfolios are both showing solid relative strength versus the market as a whole, and this has historically been a sign that we should feel comfortable being a bit more aggressive with our purchases.Consequently, I am adding more shares of some of my favorite stocks and you are encouraged to do so as well. 
Thanks to an earnings report that was far better than anticipated, Affymetrix (NASDAQ: AFFX) popped nicely for us as February got underway. For the company’s fourth quarter, Affymetrix reported revenues of $88.8 million and net income of $2.8 million, or $0.04 per share, as compared to revenues of $78.6 million and a net loss of $318.7 million, or $4.65 per share, in the same period a year ago (there were one-time charges of close to $253 million last year – hence the very large difference in results!). These results suggest that perhaps management is finally getting the company’s ducks in a row again, and in response, I am adding moreshares to both Portfolios this month. AFFX remains a strong buy under $6 and a buy under $8. For 2009, Celgene (NASDAQ: CELG) reported GAAP revenues of $2.69 billion and GAAP net income of $777 million, or $1.66 per diluted share. The price action we have seen in Celgene’s stock over the past twelve months very strongly suggests that the stock is on the verge of making a big move for us one way or the other in order to “resolve” the chart pattern… and with the company’s fundamentals only growing stronger, I am adding a few more shares in anticipation that the move is going to be into new 52-week high territory rather than back to the old lows. New subscribers are encouraged to establish a position at these prices if you have not already done so. CELG is a strong buy under $54 and a buy under $60. Shares of this closed-end fund Hambrecht & Quist Life Sciences (NYSE: HQL) have also managed to act in a manner that suggests to me that the recent pullback in the market has, in fact, been nothing more than a normal – and essential to the health of the bull market – round of profit taking on the way to higher highs. To be sure, it would only take a couple of days of negative trading activity to change this prognosis, but as more and more time goes by in which the market refuses to go lower, the more optimistic I believe we can feel about our long positions. If you do not yet have a position in HQL, you are encouraged to start one ahead of what may turn out to be a great run for biotech stocks this year. HQL remains a strong buy under $9 and a buy under $11. Learn more about this financial newsletter at Nate Pile's Nate's Notes. |
News Flash
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The good news for us as investors is that sometimes the market goes up even when skies are gray.