A Big Biotech with Big Earnings
01/05/2009 1:00 pm EST
Louis Navellier, editor of Blue Chip Growth, says Amgen has put up big numbers and it has a drug pipeline few can match.
Wall Street suffered from an abundance of Scrooge-like behavior in 2008, with greedy financial companies ignoring common-sense practices and smarty-pants hedge fund managers taking enormous risks at any cost. Worst of all, when these risky investment schemes imploded, investors like you and me were forced to share in the consequences.
In 2009, you can bet that things will be very different. Too many individual and institutional investors were burned by these greedy strategies, and the shock of the financial crisis has drastically dialed down tolerance for risk. The bottom line is that sound, conservative strategies will return to favor.
There is no doubt that Wall Street will share our focus on fundamentals in the first half of 2009 as the market itself gets back to basics. Earnings will be the guidepost for the market in the current gloomy conditions, and the anarchy we saw this past September and October will only shine a brighter light on fundamental factors like sales growth and profits.
What's more, fourth-quarter earnings are estimated to be up 14.9% over last year—meaning that our stocks are set up for a great performance. As the market returns to basics, our fundamentally superior stocks are sure to prosper. We have a lot to look forward to in 2009!
This month I have only one new buy, Amgen (Nasdaq: AMGN), which is in the recession-proof health care sector and has seen strong sales and earnings even during the recent turmoil.
Amgen is the largest biotechnology company in the world. The company helps patients fight cancer, kidney disease, and arthritis. Its drugs Epogen and Aranesp, which treat anemia, account for more than one-third of its sales. Enbrel, a leading arthritis drug, is one of the best-selling treatments in this multibillion-dollar market. Amgen currently has five blockbuster drugs like this on the market.
Amgen also has a promising drug pipeline and key marketing alliances. Recently, the company announced that it expects to have three more drugs on the market over the next five years that are projected to net $1 billion or more in annual sales each. Now that's the prescription for continued profits!
In the third quarter, Amgen's earnings rose a stunning 505.6% to $1.09 per share compared with 18 cents in the same quarter a year ago! The analyst community was expecting third-quarter operating earnings of $1.08 on sales of $3.7 billion, so the stock posted a 13.9% earnings surprise and a 4.9% sales surprise. Those numbers prove AMGN is a tremendous Buy. (It closed just below $59 Friday—Editor.)