Fundamentally Sound With An Added Perk: MDCO

| About: The Medicines (MDCO)

Medicines Company (NASDAQ:MDCO)

Medco develops products for use in coronary interventions and anticoagulation therapy in critical care hospital settings. Over the past three years this company has an earnings growth rate of 148% and a sales growth rate of 13% with zero debt.

Even more impressive is the fact that there have been significant positive earnings surprises in the past three of the last four reports with one "meet" as shown in the chart below:

Analysts have been so impressed that growth projections have been bullish and that trend has continued as shown below:

Why this is a strong candidate for your portfolio:

  • MDCO trades above its 50-day moving average
  • Analysts have been increasing guidance
  • Ranks in the top 20% of all stocks regarding earnings per share growth and in the top 10% for price performance
  • Accumulation/Distribution stats show strong institutional support

The added perk:

There is an added bonus to this fundamentally sound equity. MDCO is a stock on The Blue Collar Investor watch list of eligible candidates for covered call writing. This means that in addition to potential share appreciation, additional profits can be generated by selling out-of-the-money call options. Let's look at a current 1-month options chain as the stock trades at $30.38:

Selling the $31 call option will generate an additional 2.1% over the next 3 weeks and allow share appreciation up to $$31. Selling the $32 call option will generate an additional 1.2% over the next 3 weeks and allow for share appreciation up to $32.


Because of its strong fundamentals and strong growth projections, MDCO is a strong candidate for consideration in your portfolio. In addition to great fundamentals, MDCO options offer the added benefit of a second income stream by selling out-of-the-money call options to bolster profits.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in MDCO over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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