The worldwide economy still remains iffy with Europe solidly in recession and unknowns abounding around the direction of Chinese economic growth. Hurricane Sandy should knock .5% off fourth quarter's GDP domestically as well. As such, I am looking to increase my exposure to the healthcare sector which is less dependent on economic growth. One stock I like here is Celgene (CELG) which is historically cheap and has picked up some positive catalysts recently. It has run up some 20% since it lows in the second quarter, but it looks like there is further upside is ahead.
Key recent positives:
- Consensus earnings estimates for both FY2012 and FY2013 have gone up over the last month
- After slightly missing earnings estimates for the two previous quarters, the company has just beat estimates each of the last two quarters.
- The company got a nice mention in this week's Barrons relating to an analyst at Wells Fargo Securities that is particularly bullish on the stock. This analyst believes the rollout of Revlimid (responsible for 2/3's of overall sales) to China and Brazil should boost sales substantially. He also mentions a "deep pipeline" of products in late testing phases as another catalyst.
- Jim Cramer was also positive on the stock recently as well.
Celgene Corporation is a biopharmaceutical company that develops and commercializes various therapies to treat cancer and immune-inflammatory related diseases primarily in the United States and Europe
5 additional reasons CELG is a good growth play at under $73 a share:
- The stock sells for just over 13x forward earnings, a significant discount to its five year average (22.8).
- S&P has its strongest rating "Strong Buy" on the stock with a $93 price target on the stock. The median price target on CELG is $83 a share. The company has also more than doubled operating cash flow over that time span.
- Insiders are holding onto their shares and there has been some minor insider net purchases over the last six months.
- The stock is selling at the very bottom of its five year valuation range based on P/E, P/S, P/CF and P/B.
- The company has grown revenues at almost a 30% annual clip over the past five years. EPS has grown almost 40% on average during that time span. The stock has a five year projected PEG of under 1 (.67).