Iraq and Israel: Mideast Speculations

01/17/2003 12:00 am EST

Focus:

Louis Navellier

Editor, Blue Chip Growth and Emerging Growth

We caution readers that there are added risks to investing in companies that operate in the Mideast. Nevertheless, two of the market's most astute advisors are willing to go out on a limb to recommend positions in this region. Tobin Smith suggests an Israeli generic drug firm. Louis Navellier is recommending an oil firm that may benefit from the opening of Iraqi oilfields. Here's their commentary.

"Teva Pharmaceutical (TEVA NASDAQ) is a global healthcare company that is emerging as the dominator in the generic field," says Tobin Smith, editor of ChangeWave Investing . "The company manufactures drugs in niche markets where it has a relative advantage in research and development. Any way you slice it, Teva is a $50 stock in 2003. With 62 Abbreviated New Drug Applications representing $23 billion in brand sales, its profit growth rate of 30% is a lock. With 30% of their manufacturing in Israeli cities, the stock does gyrate on Middle East jitters. But should Teva get hit with panic selling on an Iraqi invasion or coup d'etat, it should be the first purchase in your aggressive growth portfolio. Teva is our favorite generic drug play and the best 'Bombs Over Baghdad' play I can think of."

Louis Navellier, editor of the Blue Chip Growth Letter, says "The Iraqi situation will hopefully be resolved by diplomatic or military means. I expect that oil prices will remain soft in the interim and that French, Italian, and Russian oil companies will eventually open up the Iraqi oil fields for more exploration. This will likely prove to be an incredible opportunity for ENI (E NYSE), the Italian oil company that is on our Buy List.  The firm currently has substantial interests in Iraq. Right now, Iraq is allowed to export only some oil as part of the UN's 'oil-for-food' program, but it's a tiny amount compared with Iraq's giant proven reserves. We caution against chasing these shares and recommend purchase only up to $77."

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