Healthy Gains

08/13/2004 12:00 am EST

Focus:

The healthcare field offer a wide variety of ideas. Jessica Chiaverini looks at a wound treatment, while Ken Kam looks at a bio-terror pick. Yola Edwards see trading potential in Amgen, and Chuck Carlson looks at blue chip J&J. Nancy Zambell opts for a microcap in medical monitoring.

Chiaverini, Jessica"Low prices for shares in Curative Health Services (CURE NASDAQ) have tempted us long enough, so we've named the stock our Hotline Special," says Jessica Chiaverini, of The Prudent Speculator. "Curative was a former portfolio holding of ours; we made 149% on our first go round. The firm provides services to sufferers of acute and chronic conditions through community-based branches and offers chronic wound treatment to patients in hospitals. CURE shares recently fell on news that revenue rose 44%, but that earnings fell to an adjusted $0.06 per share versus $0.30 in the year prior. While its outlook has darkened a bit, the shares now trade for 29% of trailing 12-month revenue and a trailing 12-month p/e of seven. So here's a case where we know a stock well and have to weigh attractive income-based valuations and management-endorsed growth metrics against a weak balance sheet. We've decided that the former trumps the latter. Our fundamental goal price for the stock is $13 and we're buyers of the shares up to $6.40."

Kam, Ken"Hollis-Eden Pharmaceuticals (HEPH NASDAQ), as the 9th largest m100 holding (representing our best stock pickers), has been a staple of our portfolio for several months, dating back to the m100's original buy-in during  March," says Ken Kam of Marketocracy. "Hollis is a biotech company that develops treatments for diseases and disorders affecting the human immune system. Hollis has been a beneficiary of the bio-terror scare, as the company has been working closely with the US military on a treatment for radiation exposure. Hollis is a small-cap ($185M) company with no sales or earnings yet, although their cash horde is $4.11 per sharealmost half their total share value. All of this amounts to Hollis ending up as a top sector pick for the m100, as the top group increased their holdings by 39% over the last two weeks. We'd also note that while our 'best' stock pickers have increased their holdings, buying steadily as the price has dropped from the $11 range, the 'rest' of our monitored investors have trimmed their stake by 26% which makes Hollis a 'strong buy' recommendation."

Edwards, Yola"Amgen (AMGN NASDAQ) is our top speculator’s pick for the month," says Yola Edwards in Top Stocks. "The firm is a global science-based, patient-driven company that discovers and markets cost-effective human therapeutics based on advances in cellular and molecular biology. Some of their products aid in reducing the symptoms of rheumatoid arthritis, psoriasis, and psoriatic arthritis, while others address oncology problems. Although anemia treatments Epogen and Aranesp, account for almost half of Amgen's sales, the company has two more drugs in late-stage clinical trials and 16 other candidates in mid-stage trials. Amgen is one of the few biotech companies to generate consistent profits and it trades at just 20 times estimated 2004 earnings, which are projected to grow at 20% over the next three to five years. Overall, Amgen offers an attractive buying opportunity; the shares are best-suited to active traders who are seeking capital gains and are prepared to accept above-average risk."

Carlson, Charles"Wall Street has not exactly been kind to pharmaceutical stocks in recent years," notes Chuck Carlson, editor of the DRIP Investor. "One stock that had been affected by Wall Street’s cold shoulder was Johnson & Johnson (JNJ NYSE). Solid profit results and a diversified business portfolio are setting the company apart from other healthcare issues. One of the attractions of Johnson & Johnson is its solid track record of growth. The company has had 71 years of annual sales growth and 42 years of annual dividend growth. The dividend has more than doubled since 1999, and another healthy increase is expected in 2005. During choppy markets, investors tend to migrate toward blue-chip companies with strong finances and consistent sales, earnings, and dividend records. Such a migration should help build investor support for these shares. For investors who want a broad-based play in the healthcare sector, this old favorite of mine remains a top selection."

Zambell, Nancy"Priority Healthcare (PHCC NASDAQ), one of the nation's fastest-growing specialty pharmaceutical distributors, has the prescription for potential gains," says Nancy Zambell in Elite Small Cap Trader. "As hundreds of new medications flood the market promising to cure all our aches and pains, the sheer number and variety is overwhelming. Many new drugs are highly complex, difficult to store, and complicated to administer. And in spite of their effectiveness, many new wonder drugs have a long list of potential side-effects requiring constant monitoring. Most doctors simply don't have the time, and many pharmacies don't want to take the responsibility. Enter Priority Healthcare. The company manages these complex medical treatments for doctors and HMOs. Priority grew its sales more than 39% annually over the last five years. But there's another very special catalyst promising to really move these shares higher in a hurry. Priority Healthcare just announced a partnership with a very big, prestigious, and deep-pocketed titan in its industry Aetna. This is a huge home-run for Priority, since it gains access to millions of new potential customers."

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