Four Healthy Plays from The Chartist

08/14/2013 7:00 am EST


Dan Sullivan

Editor, The Chartist

Technically, it's still way too early to worry about an impending bear market; our models remain in a highly bullish mode, says Dan Sullivan, editor of The Chartist; here, he looks at four well-positioned drug stocks.

Our overbought/oversold indicator is back to neutral after being heavily overbought as recently as July 18.

Stocks appeared to be on the verge of trending lower over the near-term, however, looking further out, it remains, in our opinion, a very powerful bull market that has further to run.

All the key averages remain comfortably above their uptrending 50- and 200-day moving averages, which is typical bull market action.

Abbott Labs (ABT) reported better than expected second-quarter earnings as a result of improved profit margins and cost controls.

The nutritional segment of their business continues to be the star performer. Sales of Similac formula and Ensure rose 7.9% to $1.7 billion, representing one-third of Abbott's total revenue.

Abbott, which is in Dan's Aggressive Account and the Traders Portfolio, has been an okay performer. Its spin-off company, AbbVie (ABBV), has been a much better performer since trading on its own.

AbbVie reported second quarter earnings and revenues which beat expectations. The company earned 82 cents per share on revenues of $4.7 billion. Their key drug, Humira, recorded a sales increase of 12.1%, with revenue sold $2.6 billion.

AbbVie is poised for strong growth with a significant pipeline of new drugs with terrific potential. They are looking for 15 FDA approvals between 2013 and 2017.

Besides being a solid performer in Dan's Account and the Traders Portfolio, the stock has a good yield of 3.6%.

Amgen (AMGN), the world's largest biotech company, reported second quarter earnings and sales that surpassed analysts' expectations.

For the quarter, the company earned $1.89 per share. They are projecting full year revenue to be in the $17.8 billion to $18.2 billion range. The stock is in Dan's Portfolio and our Trading Portfolio.

Biogen (BIIB) reported that second quarter profits exceeded analysts' expectations. Biogen reported earnings of $2.29 per share, well above Zacks Consensus estimate of $1.83. Revenues for the quarter jumped 21% to $1.7 billion.

The company again raised its earnings guidance for 2013 and now expects earnings in the range of $8.25 to $8.50 per share. The stock continues to be one of the best performers in the Actual Cash Account, Dan's Account, and the Traders Portfolio.

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