The nine stock picks I posted in mid-December are off to a strong start in the new year, with seven of the stocks registering gains and a 14.5% gain for the group as an equal-weight average versus a 1.1% gain for the S&P 500 SPDR ETF (SPY). Click on any of the links below for my most recent articles on each company.
The four smallest, defensive healthcare stock picks are leading the group with an average gain of 30.6% thanks to an 87.3% gain for Javelin Pharma (JAV) and a 42.9% gain for Caraco Pharma (CPD) while Momenta Pharma (MNTA) is up 1.8% and China Medica (CMED) is the laggard of the four with a loss of 9.7%.
As I recently wrote , CMED has transformed into a pure-play molecular diagnostics company with the sale of its HIFU medical device business for $53.5M at year-end. Investors appear to be taking a cautious stance on the transition period as CMED is also absorbing a major acquisition of the human papillomavirus [HPV] DNA Biosensor Chip for cervical cancer detection and the Surface Plasmon Resonance [SPR] Analysis System.
The acquisition provides CMED with a molecular diagnostics platform for HPV, including strains that cause cervical cancer, which is an estimated $700M market in China alone. CMED already has plans to expand the use of the SPR System beyond just cervical cancer, with potential clinical diagnostic applications that include the detection of biomarkers for infectious diseases, cancer, cardiovascular disorders, and immune system disorders.
Kansas City Southern (KSU) should benefit from plans by President-Elect Obama for major infrastructure spending and increased demand for rail transport to move the raw materials for building new roads, buildings, and bridges as part of this initiative.
Apple (AAPL) is rebounding from recent lows on easing concerns over the health of CEO Steve Jobs and the Company enjoys a 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.
Celgene (CELG) got hit by two downgrades this week on pricing concerns for some of the Company's drugs, but the Company still represents the best high-growth option in the cancer biotech space and could even become a takeover target for a big pharma company such as Pfizer (PFE) to add both sales growth and pipeline prospects.
The potential for legislation [web link to full text of H.R. 1108] to place tobacco products under FDA regulation and add other restrictions on marketing should benefit Altria (MO) as the measure would also crack down on the sale of counterfeit tobacco products. MO also closed on its acquisition of smokeless tobacco maker UST Inc. earlier this week.
Finally, Kraft Foods (KFT) has posted a solid 4.2% gain with a dividend yield that is still above 4% and is included in the stock picks as a defensive, consumer staple company that should do well regardless of economic conditions.
$18.75 (01/08/09)
