Gue: Healthy Speculations

09/12/2003 12:00 am EST

Focus:

Elliott Gue

Editor and Publisher, Energy and Income Advisor and Capitalist Times

Wall Street Winners is a sophisticated service, primarily designed for those who understand more complex trading strategies such as puts and calls, straddles, and short sales. The service also frequently takes straight-forward positions in stocks, such as its latest recommendation from Elliott Gue to buy two healthcare issues.

"The saga of Irish former blue-chip pharmaceutical company Elan (ELN NYSE) continues. The shares traded as low as $1 last year on fears that its inability to raise cash was going to put it in bankruptcy. Elan sold off products and divisions in order to get the cash necessary to meet its debt payments and S&P has taken Elan off its negative credit watch list, which means that the danger of a technical default is no longer here. There’s strong speculation that Elan will be acquired, although that may be some time in the future. For now, the heavy volume gap up last week on relief that the technical default had been avoided is likely to hold. Any continuation of the rally will likely help Elan challenge its spring highs in the high single digits.Buy a $3,000 position of our $50,000 model portfolio with a stop-loss at $4.89. We plan to double that long position on any follow-though on the recent heavy volume upside reversal.

"Investors should also buy Accredo Health (ACDO NASDAQ). Accredo recently broke above its 200-day moving average with a gap higher on heavy volume. It looks to be filling a previous gap toward the $35 area on this move. The specialized pharmacy sector of which Accredo is a member has been hot recently. The stock’s recent earnings release was well received by the market. That momentum should carry for some time. But the stock can be volatile so we’re keeping the position size relatively small--only $3,000 out of our hypothetical model portfolio of $50,000. Buy below $29, setting a stop loss order at $25.68."

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