Gary Tanashian submits: This past December, I added Teva Pharmaceuticals (TEVA) at 31.30. Unfortunately, it was bought in an account managed for someone else, while my own accounts unhappily remain TEVA free - for now.
It was originally bought due to what I believe will be a favorable political atmosphere for generic drug companies: the upcoming expiration of patents on many big-name drugs, and also the non-participation of companies like Teva and Barr Pharmaceuticals (BRL) in the 2006 rise in most stock market segments. The old "buy low, sell high" method.
Technical analysis and market sentiment play a big role in my investment and trading styles. Consider Shlomo Greenberg's Teva: What Are the Analysts Afraid Of? and a subsequent upgrade by a Goldman Sachs analyst (the tailwind of which TEVA is still riding) that came after impressive 3Q earnings:
"North American pharmaceutical sales (including Copaxone®) reached $1.325 billion in the quarter, compared to $707 million in the third quarter of 2005, an increase of 87%. Sales benefited this quarter from 22 new products that were not sold in the comparable quarter of 2005, the most significant this period being the exclusive launches of simvastatin, sertraline, venlafaxine, and pravastatin as well as from increased sales of Copaxone® and the first sales of Azilect® in the U.S."
With Teva's strong portfolio featuring the successful Copaxone, it looks like a nice investment case can be made.
Of course, I would not plan to immediately follow an upgrade by a major Wall Street house as, more often than not, that is a sure fire way to under performance. The shares purchased in December were for portfolio diversification and longer term hold. They were bought before any notable chart signal other than "buy low". The shares I am looking to buy going forward are definitely in consideration of what I believe are the company's strong fundamentals combined with a technical breakout on the weekly chart.
Patience is the prescription here for anyone interested in adding a nice generic drug company to their portfolio. If stock market conditions remain supportive, I will plan to add TEVA on a retest of the weekly breakout after the stock settles down a bit. Of course, being a macro market guy first and foremost, my view on any individual stock could change as the macro backdrop does. I am not personally a "buy and hold" forever investor.
Disclosure: Author holds TEVA in an account managed for others and currently has no personal position.