Celgene (CELG) is one of the fasting growing companies in the NASDAQ 100 index, which is the home of America’s most successful and most dynamic growth companies. Celgene (CELG) is a bio-pharma company discovering and marketing life-saving drugs aimed at blood, cancer, and immune system disorders, all of which are extremely large marketing opportunities. Celgene currently has five key products on the market, with many more in development, and its time has come to become a household name among drug and biotech stock investors.
Celgene’s power house drug is Revlimid, which is approved in the U.S., Europe, and Latin America to treat multiple myelomas, increasing survival so much that statistically those receiving treatment can expect similar survival patterns as healthy people. Multiple myelomas is the second most common blood cancer, and first appears on average around age 60-70. This is smack where the leading edge of the western Baby Boom generation is now entering, and thus the number of new cases can be expected to explode going forward from here.
In addition to Revlimid, Celegene has four other major products currently on the market: Thalomid (multiple myelomas,) Vidaza (myelodysplastic syndrome,) Istodax (cutaneous T-Cell lymphoma,) and Abraxane (breast cancer.)
Products in late stage development soon to undergo NDA filing with the FDA are Revlimid (prostate cancer,) Vidaza (acute myeloid leukemia, Istodax (peripheral T-Cell lymphoma,) and Abraxane (lung cancer.)
Celgene puts 30% of revenues into research and development, twice the industry average, with 25 products currently undergoing Phase III trials prior to FDA submission. There are also 17 drugs undergoing early stage development.
Proof in the Pudding
If a company has such superior products than its competitors, and is positioned front and center in favorable big picture trends, then it should show up as increasing sales and earnings in the here and now. If not, one should question the overall premise regarding such products and such hopes for the future.
Celgene is on track to grow its earnings 21% this year over last on sales growth of 24%. Next year earnings are expected to grow 20.7% on an increase in sales of 13.4%. With a forward P/E in the 17-14 range the stock is currently very cheap in relation to its superior growth, making it one of the best growth and value propositions in the NASDAQ 100.
Sales of Revlimid alone should reach $3 billion in 2011, and is being tested in over one hundred clinical trials, making it one of the most important drugs ever. Medicare reimbursements to Celgene have been rising, due to the cost benefit versus other treatment options. Cash comes in at a very healthy $2.6 billion, and Celgene enjoys an incredibly healthy gross profit margin of 92.9%. Analysts have been raising their estimates over the past week and month.
Technical Picture
Celgene has issued a new buy signal from the Alphaking.com Trading signal (see chart below) and currently offers a fantastic buy opportunity after enduring a prolonged base building correction. I am buying Celegene for the AK/Q10 strategy (explained below.)
Click to enlarge:
CELG as traded via our trading signal, (shown in the chart above, cash on sell signals) turned $1,000 invested in 2000 to $29,964 by mid-April, 2011. There were 14 trades during those 11+ years, with 57% delivering a profit. The average gain on the winners was 122%, versus an average loss of 11% on the failed signals.
All 10 stocks currently held in the Q10 portfolio (see below) traded using our signal and turned $1,000 into $10,991 between 2000 and mid-April, 2011. There were 108 trades in total for the 10 stocks during thse 11+ years, with 56.5% delivering a profit. The average gain on the winners was 88%, versus an average loss of 12% on the failed signals.
Current Q/10 portfolio and trading stance:
Amazon AMZN (BUY-HOLD)
Baidu BIDU (BUY-HOLD)
Celgene CELG (BUY-HOLD)
DirecTV DTV (BUY-HOLD)
Netflix NFLX (BUY-HOLD)
NVIDIA NVDA (SELL-CASH)
Autodest ADSK (BUY-HOLD)
Illumina ILMN (BUY-HOLD)
Priceline.com PCLN (BUY-HOLD)
Wynn Resorts WYNN (BUY-HOLD)
All stocks are held until the stock’s trend following indicator triggers a sell signal, and then cash is held until the next buy signal.
Sources: yahoo.finance and Reuters for fundamental data, alphaking.com for technical trading data, and Celgene.com for information regarding drug development.
Disclosure: I am long CELG.
