Friday, January 14, 2005

Picks and Shovels

Well, the market finally closed with a nice gain. Overall it was a nice week. The JP Morgan Healthcare conference generated some positive news, which gave a boost to several of my holdings.

The are lots of consolidation going on in the picks and shovel companies (they supply kits and reagents for researchers). The picks and shovel companies in my portfolio are Invitrogen, Fisher Scientific and Qiagen. Both Invitrogen and Fisher Scientific have made nice moves over the past year, but Qiagen has not done much. Lots of companies are trying to enter Qiagen's turf (they make kits used to purify DNA, RNA and proteins). Qiagen dominates this niche and I really don't see how their rivals will gain much share. Scientist are a finicky bunch. If they use a reagent or kit and it works well for them; they are very reluctant switch to a cheaper rival. They are also moving into the molecular diagnostics arena. I think this maybe the year for Qiagen to make it's move. Q4 was a very strong quarter for these companies (Invitrogen indicated Q4 was above estimates and Fisher Scientific reiterated their numbers).

The markets will be closed on Monday. A well needed break from the market action.


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