SERO: Leo's Latest Breakout Buy
09/12/2003 12:00 am EST
Each week, Leo Fasciocco offers a "Featured Stock Under Accumulation" in his Ticker Tape Digest. These stocks are chosen because they are generating strong buying interest and appear ready to break out of a basing pattern. Here's Leo's latest breakout candidate.
"Serologicals (SERO NASDAQ) supplies major health companies with specialty human antibodies and related products; its annual revenues are $145 million. The company takes antibodies from blood donated at its own collection facilities and sells them to companies that use them to make products that treat rabies, prevent hepatitis B, and protect newborns from Rh incompatibility. The company's other products are used to make blood-typing reagents and diagnostic products. Its customers include Bayer and Aventis.
"SERO has been reducing costs and cutting debt to improve profitability. It is also focusing more on cell culture supplements and diagnostic antibodies. We see net coming in at 64 cents a share this year, flat with a year ago results. However, in 2004, we anticipate a 39% jump in net to 89 cents a share and in 2005, a 25% improvement to $1.11 a share. SERO draws our interest due to the consistent and heavy accumulation taking place in recent weeks. The tape action indicates good possibilities for a rally to set in at any time. The stock is in a nine-week basing pattern following a strong run up from 8 back in March to a peak of 17.
"The stock has excellent sponsorship. Fidelity Low-Priced Stock Fund, which is 5-star rated, was the biggest buyer recently; it purchased 647,000 shares. Also, 5-star rated Sentinel Small Company Fund bought 200,000 shares and Icon Healthcare Fund bought 137,000 shares. Overall, SERO is a turnaround stock that is now poised to move higher. The bullish tape action is very impressive. We suggest accumulation of a partial position now with further buying to be done on a move over 15.50. We are targeting a move to 20 to 22 within the next six months. A protective stop can be placed near 12.50."