Medical Trio from Wall Street Winners
07/04/2003 12:00 am EST
Despite their cautious stance on the overall markets, Elliott Gue and Ivan Martchev, co-editors atWall Street Winners, continue to find select issues expected to buck the trend. Among their recommendations are three health-related issues. One is a generic drug maker in India, another is a leading player in implantable medical devices, and the third is a global drug firm. Here's their three-pack of medical picks.
"We continue to view generic pharmaceuticals as a sector that offers significant upside because of ever-increasing global health care expenditures.Dr. Reddy's Laboratories (RDY NYSE) is one of the most exciting--but volatile holdings--in our stock model portfolio. We prefer this India-based generic pharmaceutical companies because of their cost structure as well as the fact that local laws allow them to develop a molecule years ahead of its patent expiry. The view here is that Indian companies will gradually evolve into global generic and specialty pharmaceuticals. Dr. Reddy's is in the vanguard. It's been building its distribution channels in the US, as well as successfully experimenting with branded products. Sooner, rather than later, some of these higher-margin branded generics will be available at your local pharmacy.
"Medtronic (MDT NYSE) is the world's leading medical technology company, specializing in implantable and interventional therapies. The company produces instruments that are used for heart, vascular, neurological, diabetes, and other illnesses. It's one of the most conservative companies in the industry and its long-term success has been well documented. Its plan of actively participating in all the growth aspects of the industry has been successful--revenues have been growing at 20%. Medtronic is a well-run company that will continue to produce positive results for its stockholders.
"Novartis (NVS NYSE) has all the ingredients of a solid global pharmaceutical company: above-average top-line growth, stable and growing margins, enormous cash generation, innovative research and development, solid and experienced management, and a great generics division. Unlike other big pharmaceuticals, only 18% of its sales are exposed to possible patent expiration in the next three years. The company has been surprising on the upside through increases on its operating margins and great cost management. It's one of the few big pharmaceuticals that's worth your money."