Friday February 17, 2012
by Nate Pile, editor Nate's NotesThe biotech sector has been on fire in recent months, and I consider
Cubist (
CBST) and
Gen-Probe (
GPRO) as top picks. Their chart patterns have “bullish” written all over them.
Cubist basically spent five years stuck in a trading range before it finally “broke out” last April). I am very excited about the fact that the stock is tracing out a chart pattern that history suggests ought to do nothing but accelerate in the upwards direction -- if the trend for the sector continues.
Given where we appear to be at in the fear-greed cycle for biotech stocks, you are encouraged to be patient about taking profits -- and to start a position if you do not yet have one.
For 2011, Cubist reported revenues of $754 million and net income of just over $33 million, or $0.52 per share. CBST is a strong buy under $38 and a buy under $44.
Along with Cubist’s stock, my 24 years of experience following biotech stocks tells me that Gen-Probe’s stock is also acting in a manner that suggests it is poised for a very strong run to the upside -- again, if the sector itself remains in a bull market.
The fact that the stock “popped” late last month – and has done nothing but slowly grind higher following the initial move up – is very bullish, indeed.
You are encouraged to look at additional strength as a reason to buy rather than an excuse to sell.
If the sector as a whole shows signs of weakening, I will have to reassess this opinion, but for now, I hope you will join me in adding to your position. GPRO is a strong buy under $66 and a buy under $72.
Learn more about this financial newsletter at Nate Pile's Nate's Notes.
