Vardy's View

12/30/2005 12:00 am EST

Focus:

Nicholas Vardy

Editor, Bull Market Alert, The Alpha Investor Letter, and The Global Guru

Another newly-launched service,  Global Bull Market Alert , is off to a winning start. Editor Nicholas Vardy has shown his investment skills with such initial picks as Mitsubishi, Elan, and American Movil, which all rose sharply after being added to his buy list. Here’s his latest.

"If there were a Stock Hall of Fame for the global market, it's clear that Israeli pharmaceutical giant Teva Pharmaceutical (TEVA NASDAQ) would be the Babe Ruth of the group. Since December 1990, Teva has skyrocketed from 66 cents to $44.95. Early investors in Teva have made 68 times their money. That's better than master investor Warren Buffett (a 13 times return over the same period).

"Here's why we think Teva–our latest Global Bull Market Alert pick--will continue to generate big profits for investors well into 2006. As a global generic drug maker, Teva is poised to take advantage of drugs coming off patents. Generic drugs are set to enjoy a banner year in 2006. Teva also recently announced that it expects to close its purchase of fellow generic drug maker Ivax Corp., on Jan. 12, creating the world's largest generic drug company. This should help propel the stock upward.

"Meanwhile, six blockbuster drugs with sales of more than $1 billion each are set to go off-patent in the US, ranging from Merck's Zocor and Sanofi-Aventis' Ambien to Bristol-Myers Squibb's Pravachol and Pfizer's Zoloft. Just about $23 billion in products will lose exclusivity, with more than $18 billion of that coming from the US. With an estimated 10% share of the generic drug market, Teva will reap big profits in the next few years from this development.

"Teva is also well set to take advantage of a bird-flu crisis, should one erupt. Swiss drug giant Roche, in a move to silence criticism that it's guarding the formula for its bird-flu drug too closely, has reached agreements with Teva (as well as a handful of other drug producers) for the production of Tamiflu. That means any bad news on that front will send Teva's stock soaring.

"Finally, Teva's stock is exhibiting all the technical characteristics we like - it is a steady performer that remains unruffled by political uncertainty in its home market of Israel. So buy Teva at market today and place your initial stop at $39.50. More aggressive investors looking for an options play on Teva's continued upswing into 2006, buy the June $50 call options."

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