Nine for '09 Picks Start Strong

The nine stock picks I posted in mid-December are off to a strong start in the new year, with seven of the stocks registering gains and a 14.5% gain for the group as an equal-weight average versus a 1.1% gain for the S&P 500 SPDR ETF (SPY). Click on any of the links below for my most recent articles on each company.

The four smallest, defensive healthcare stock picks are leading the group with an average gain of 30.6% thanks to an 87.3% gain for Javelin Pharma (JAV) and a 42.9% gain for Caraco Pharma (CPD) while Momenta Pharma (MNTA) is up 1.8% and China Medica (CMED) is the laggard of the four with a loss of 9.7%.

As I recently wrote, CMED has transformed into a pure-play molecular diagnostics company with the sale of its HIFU medical device business for $53.5M at year-end. Investors appear to be taking a cautious stance on the transition period as CMED is also absorbing a major acquisition of the human papillomavirus (HPV) DNA Biosensor Chip for cervical cancer detection and the Surface Plasmon Resonance (SPR) Analysis System.

The acquisition provides CMED with a molecular diagnostics platform for HPV, including strains that cause cervical cancer, which is an estimated $700M market in China alone. CMED already has plans to expand the use of the SPR System beyond just cervical cancer, with potential clinical diagnostic applications that include the detection of biomarkers for infectious diseases, cancer, cardiovascular disorders, and immune system disorders.

Kansas City Southern (KSU) should benefit from plans by President-elect Obama for major infrastructure spending and increased demand for rail transport to move the raw materials for building new roads, buildings, and bridges as part of this initiative.

Apple (AAPL) is rebounding from recent lows on easing concerns over the health of CEO Steve Jobs and the company enjoys a cash hoard of $24.5B ($27.55 per share), zero debt, and culture of creating innovative products that people want such as the iPod, iPhone, and Mac computers.

Celgene (CELG) got hit by two downgrades this week on pricing concerns for some of the company's drugs, but the company still represents the best high-growth option in the cancer biotech space and could even become a takeover target for a big pharma company such as Pfizer (PFE) to add both sales growth and pipeline prospects.

The potential for legislation [web link to full text of H.R. 1108] to place tobacco products under FDA regulation and add other restrictions on marketing should benefit Altria (MO) as the measure would also crack down on the sale of counterfeit tobacco products. MO also closed on its acquisition of smokeless tobacco maker UST Inc. earlier this week.

Finally, Kraft Foods (KFT) has posted a solid 4.2% gain with a dividend yield that is still above 4% and is included in the stock picks as a defensive, consumer staple company that should do well regardless of economic conditions.

Comments

[stox2buy:]

The prime time of investment in TECHNOLOGY sector, namely computer/network/inter... personal devices and enterprise software(ERP) was long gone.

The next big thing coming is stem cell based regenerative medicine, this is a huge market maybe as big as TECHNOLOGY. From the hardware(tools) to treatments to drugs, now the golden opportunity for those who do some study and digging, a lot have been going on yet a lot more will be happening as the new year unfolds especially in "adult stem cell" area.

Investment in tools, treatments or drugs now is like investment in TECHNOLOGY a decade ago in hardware, software and internet/mobile devices.

Investment in stem cell exectraction/preservat... tools is the safest and the 1st to be rewarded, then treatments and then in drugs. Treatments and drugs will have the biggest winfall but they are further down the pipeline in terms of timing.

Disclosure: long tool stock Thermogenesis(KOOL), lurk on a few stocks in treatment and drug with stem cell/regenerative medicine flavor. KOOL was unjustified beatened at year-end for going under $1. No debt, lots of cash with new products coming as scheduled.

Mike, You need to check on KOOL, it's been awhile. They are shooting to become profitable for the first time next quarter.

Jan 09 10:29 AM

[jepittman:]

MO is one of those stocks investors will snap up first as yield starved accounts become increasingly dissatisfied earning virtually nothing in money markets and CDs. The amount of money parked in these and other short term investments exceeds the market cap of the stock market. Your call is perfectly plausible to me.


On Jan 09 02:35 PM dividendmachine wrote:

> Those who buy MO will be collectinga dividend yield over over 8.25%
> level and the last 2 tims in this decade the stock had a div yield
> over 7% and a 20% drop in price the stock was up 9 months later 63%
> and over 100% 9 months later.Facts are facts.peace

Jan 09 04:58 PM

[Zoltan L. K...:]

It is hyppocratic, how some analysts use the creative. technical, and leadership prowess of ex Apple managers as an argument for future success at other corporations (see for example Palm). Then again they try to utilize "concerns over the health of CEO Steve Jobs" as an argument against the potential of Apple. Most members of its leadership team has been together for over a decade. They have a strong culture, focus, and flexibility. Apple had to pay a very high price to learn its survival, and turn-around lessons. I guess they have learnt it well. That makes for capabilities.

Jan 10 05:49 AM