The nine defensive stock picks I wrote about last week are off to a very strong start, posting a 7.4% gain as an equally-weighted average compared to a 1% gain for the S&P 500 SPDR ETF (SPY). The biggest gains came from the smallest companies in the index – Caraco Pharma (CPD) was up 40% while Javelin Pharma (JAV) increased by 19% in the past week and has more than doubled since I first wrote about it in early December .
Despite a drop in shares of Altria (MO) over the past week, I have added to my long position in MO with an 8.7% dividend yield and the potential for legislation [web link to full text of H.R. 1108] next year which would place tobacco products under FDA regulation.
Regulation by the FDA would ensure the following bullish conditions for MO, which already dominates the U.S. market for tobacco products and will close on its acquisition of smokeless tobacco maker UST Inc. (UST) early next year: cigarettes would never be banned, new tobacco products would likely never be approved, advertising would be further restricted, and the FDA would take a tougher stance on the sale of counterfeit tobacco products.
Apple (AAPL) has lost 9% in the past week, with concerns over the health of CEO Steve Jobs culminating today in a 6.6% decline as Apple announced its final appearance at the Macworld trade show will occur without Jobs. However, with the Company's cash hoard of $24.5B ($27.55 per share), zero debt, and culture of creating innovative products that people want such as the iPod, iPhone, and Mac computers – the stock is a buy below 90 bucks and poised to rebound as the current uncertainties are resolved and the Company continues to gain market share for its products.
Kansas City Southern (KSU) rebounded nicely today on an upgrade by UBS and the refinancing of $200M in senior debt due next year. Kraft Foods (KFT) inched up slightly in the past week and declared its quarterly dividend of 29 cents with a 4.3% yield with an ex-dividend date of 12/23/08 which is payable on 1/13/09. China Medical (CMED) rose by nearly 7% in the past week on the lack of any news or catalyst as the Company continues to rebound from multi-year lows near the level that the stock began trading over three years ago.
Celgene (CELG) also rose 7.5% in the past week on the lack of any apparent catalysts while Momenta Pharma (MNTA) was up by nearly 5% after receiving net proceeds of $24.1M late last week on the sale of 2.8M shares of common stock at a discounted price of 9 bucks. The cash infusion provides Momenta with $119.5M in cash, compared to a trailing 12-month net loss of $58.6M and the potential for a major catalyst in 2009 if the pending ANDA for M-Enoxaparin is approved by the FDA to compete for the $4B market for the injectable blood thinner Lovenox.
$53.3902 (12/18/08)
