A Few Small Trades

I made a few small trades this week. On Tuesday, I sold J. Crew (Ticker: JCG) at $39.98 generating a measly return of 3.57% and I used the proceeds to add to my Apple, Inc (Ticker: AAPL) position at $95.66. And today, I picked up a few shares of Volcano Corp (Ticker: VOLC) @ $18.14. I didn’t know much about Volcano until Jim Cramer mentioned it three weeks ago. Then in today’s Investor’s Business Daily, they had a write up about the company and I really bought the story. It’s a small cap company focusing on intravascular ultrasound (IVUS) products. They basically manufacture tiny cameras used to direct the delivery of coronary stents. The placement of the stents is critical and Volcano ensures exact placement. The analyst expects the company to lose 12 cents in 07, but generate a profit of 12 cents in 08 and 36 cents in 09. I shouldn’t be buying right now, but I couldn’t resist this one. Hopefully, this Volcano won’t blow up on me!!!

Poor Amgen

I don't like to catch a falling knife, but you just have to ask how much more can Amgen fall? I don't remember a company releasing so much bad news one after another:

(1) Not filing for an expanded indication of Sensipar
(2) Black box warnings on EPO drugs
(3) Stopping a Phase III trial of Vectibix with Avastin due to a lack of efficacy and toxicity concerns.

All is not lost in Vectibix, there are still several clinical trials underway. The following was published in the (March 23rd edition of BioWorld): Christopher Raymond, with Robert Baird & Co. wrote in a research note that Vectibix "has potential for strong uptake" in second- and third-line settings," though the PACCE data might delay the drug's off-label use in first-line therapy. That setback prompted him to adjust revenue estimates for Vectibix, now projecting that sales won't hit $1 billion until 2010.

At this price, it's worth to nibble a bit. The stock didn't decline too much on the Vectibix news. It looks to me that just about every single bit of bad news has been factored into this stock, but didn't I say this last time as well!? I'm looking for the day that the stock goes up on bad news; that will signal the bottom.

Market Still Correcting

It looks to me there’s more room to the downside for the market. If you take a look at the weekly chart of the NASDAQ, we’re still in the early stages of the correction. I may nibble a bit here and there for some bargains, but I would not be aggressively buying in this market. There are some stocks holding up fairly well such as J. Crew (Ticker: JCG) and Apple (Ticker: AAPL). I currently have positions in both of these stocks. There’s really not many out there right now. So just be patient…

Invitrogen Looks Good Here

Invitrogen (Ticker: IVGN) looks like a good short / intermediate term trade. Just take a look at the chart and its fundamentals isn’t bad either. The stock recently filled the recent gap up when the company released a positive earnings report. Now with the recent correction, the stock has traded back down and looks like a coiled spring. I see minimum down side risk in this stock. I currently have a long term position in this stock, but I may pick up a few more shares for a quick trade. A lot of biotech’s look good right now with many sitting at long term support levels. Which one to pick with so many to choose from???

Amgen = Biotech Value

The biotech sector as a whole has gotten cheap. Many are trading at or below their long term growth rates. One obvious value is Amgen (Ticker: AMGN), yes Amgen. The market definitely over reacted to today's news about the black box warnings on Aranesp and Epogen. This label change is targeted towards off label use. Here's what the analyst had to say about Amgen's black box warning (March 9th edition of BioWorld).

"With this negligible off-label use in chemotherapy-induced anemia, we believe tighter FDA language regarding hemoglobin maintenance would have little effect on [sales]," wrote analyst Chris Raymond in the Baird report.

Bret Holley with CIBC World Markets in New York did not see much consequence in the label change, either, since they reflect findings in studies already disclosed. He allowed that "there could be some incremental reductions in overall EPO usage over the longer term," plus dosing vigilance and limits in the cancer-anemia setting. But Amgen's stock value "may be overly discounting doomsday scenarios" for EPO drugs, "given the totality of historical safety data and physician experiences with the drugs."

Just about every piece of bad news has been priced into the stock. The company is trading at ~13X this years earnings and ~12X next years earning. The company's long term growth rate is ~ 15%. Amgen stock is cheap and sometimes you just have to step in when there's blood on the street.

Back From Vacation

I'm back from a vacation to the Far East and also back to a little market correction. I'm still trying to get a good feel for this market. I expect the indexes to find good support at their 200 day moving averages. One stock I'm keeping an close eye on is Las Vegas Sands (Ticker: LVS). I would pick up a few shares in the low 80's. Macau is for real and Las Vegas Sands is the leader in Macau. I visited Macau on this trip and all of the casino constructions taking place is just mind blowing. Here's a picture of some casino constructions in Macau. I've never seen so many cranes before...



And here's the almost completed Venetian Macau...