Hager: Spectacular Gains
01/09/2004 12:00 am EST
Fred Hager went out on the limb in our 2003 Top Pick report to choose a stock that was embroiled in litigation related to intellectual property rights. Due to favorable rulings, Rambus rose from $6.71 to over $30, for a gain of more than 350%. Here's an update on Rambus and a new favorite for 2004.
"As a result of royalties owed to Rambus (RMBS NASDAQ) for intellectual property rights on existing products, and a new stream of revenues from new products, we feel that Rambus may indeed be $1000-a-share stock by 2007. In our firm view the result of the patent litigation and antirust litigation will favor Rambus. Armed with the claim definition results of the Federal Circuit, Rambus should have little problem demonstrating that memory manufacturers are infringing on their patents. It is likely that only a patent validity defense will be of any concern in the face of such strong patent claims. We firmly believe Rambus is one of the best investments for big returns in the next several years."
Here's Hager's new top pick for 2004: "The FDA in 2001 and 2002 put forth guidance stating that compounds that enter the blood should have cardiac safety testing across all therapeutic areas and that third-party central core lab should be used. That, in a nutshell, is e-Research (ERES NASDAQ), which has about a 50% market share already. The company has very little debt, an experienced management team, rapidly growing revenue and earnings, a solid roster of blue-chip customers, and a potentially exploding market with significant barriers to entry. I like the mix and am very excited that this company is in the early stages of rapid growth. In late 2003, volatile trading in eResearch certainly put a scare into some investors and reports of heavy insider selling sent the stock reeling. Suffice it to say, I don’t put much faith in analysts. I continue to feel that eResearch is in the leadership position in its markets, and remain very bullish on the impact FDA guidelines will have on the business of eResearch and its long-term stock price."