Jim (cont'd):
Now, Miser
thinks that we
should put a
whole sector
into the sell
block… the
Biotech sector…
she says that it
has had it…
why?… is she
looking at how
the companies
are doing? new
drugs, or
anything like
that… no… she is
looking at the
IBB and she says
that it has got
a terrible
chart… that’s
right… she sees
it like this…
she thinks that
this is
beginning of a
major downplay…
right here…
right here is
where she is
saying that you
gotta get out of
the IBB… now she
saw the same
thing in the
chart of the
gold ETF… okay,
take a look at
this GLD… this
is where she is
comparing so you
have an idea…
she saw the same
pattern right
here, and she
recommended
sell… and it has
been working…
why does she see
this things and
we don’t… well
because she sees
trend lines that
have been
broken… the gold
ETF has broken
the up trend
line… and so has
Biotech…. that
means the
indexes rate of
ascent has
changed… she is
measuring how
powerful the
rally is and
whether it has
peaked…
generally that
indicates that
the selling
pressure is out
weighing the
buying pressure…
or that the
buyers have
stepped back…
basically, she
thinks that it
has ran out of
steam.
Now, the IBB has
rallied back to
the underside of
that broken
trend line… let
me put that…
there it is, see
it goes here…
again I am not a
technician but I
know how to read
these things… it
went here just
like the gold
ETF, and then
failed… okay,
failed… it did
not keep going
back up to where
this was…which
would have been
a bullish chart…
it failed right
here, like the
gold ETF… and
she thinks it
falls below
$68... then it
should head back
to the low
$60’s… well you
know… you
probably don’t
want to be in
that move… that
would be pretty
bad… her
takeaway is that
when the group
is as well loved
as the Biotechs
are, and they
are… they can’t
go up anymore…
that all the
good news is
probably priced
into the group
and should go
lower not
higher… she
thinks the
buyers are
backing off..
that is what we
have been seeing
with the gold
shares ETF’s
when it broke
through $82 now
at $80... she
thinks we will
be seeing the
same thing
happening with
Biotech… okay,
that is the
chart.
Now, what do the
fundamentalists
say… first of
all I think
nothing is
better than
Biotech when it
comes to
investing in
during
recession… you
don’t stop
taking your life
extending Cancer
drug just
because the
economy has
slowed down…
second, it is
possible that
more drug
companies could
follow in the
footsteps of
J&J, and use
their vast
hoards of cash
to acquire
Biotech
companies that
are at depressed
prices… because
of this
stuff…this
nonsense… third
Biotech is as
beloved by the
bullshivichs… I
mean the
Democrats… as
big pharm is
hated… so with
Obama about to
storm the… Obama
about to take
over the White
House, and the
Dems expanded
majority in the
Congress the
fundamental case
for the group is
strong… that
said… okay,
maybe Miser
might be right
about the actual
index the ETF…
but individual
Biotech stock
prices are much
more dependent
on specific
company
performance… and
not on a sector.
How about this…
just so you know
what I am
talking about…
in 2008,
ImClone was up
62%, bought by
Eli Lilly…
Vertex was up
30%… Amgen up
24%…but at the
same time Human
Genome
Scientists down
79%… ZymoGenetics
down 74.3%…
Incyte down
62.3%… these are
not commodities…
this is not
natural gas… so
when it comes to
bio-tech,
individual
selection is
key.. and when
it comes to
individual
bio-tech… there
is no stock I
like more than
Celgene Corporation (CELG*)…
and you are
familiar with
that… I have
liked it since
the start of
this show… my
charitable trust
owns it… okay…
AAP… and I have
been riding this
one for multiple
years… Celgene
is just 4 points
of its 52 week
low… it has been
a terrible
stock…it is
trading at 23%
time earnings… a
multiple of just
.6 times its
long term growth
rate… even
though it has
the highest
growth rate in
large cap
bio-tech…
Celgene has
never traded at
.6 PEG ratio…
before that the
PE multiple over
the growth rate…
that is called
PEG ratio, that
is how we take
into account the
growth when we
are evaluating a
stock… it is
especially
important for
high growers
like Celgene… it
has never been
this cheap… at
other times
money managers
have been
willing to pay
up to 2 times
growth for a
stock like
Celgene… now it
is barely
trading at a
quarter of
that.. so I
think this is a
phenomenal
opportunity to
get into a high
quality proven
bio-tech name…
it has it’s best
drug in its
class, Revlimid,
a blood cancer
drug with
multiple
indications…
that means Mad
Money… a strong
balance sheet,
and a great
management team
at a bargain
price…you know
Bob Hugeman, we
have had em on
the show,
actually three
years ago in
Virginia… just
so you know…
this is… this is
the worst chart
in the book…
every single
chartist is
going to tell
you Jim you are
absolutely nuts,
this stock is
about to break
big… this is a
classic Head &
Shoulders, they
would tell you
that this is
just awful… but
I would not put
Celgene anywhere
near the sell
block because I
know the
fundamentals …
this is a
company that I
think is going
to continue to
see long term
earnings growth
of 30% plus… and
revenue growth
of 30% plus, for
the next 3 to 5
years… based on
increased
Revlimid
penetration… up
to 1.5 million
patients could
all be taking
this drug, right
now only 90,000
people take it…
this is Revlimid
applications…
non-Hodgkin's
lymphoma,
chronic
lymphonic,
alpholusitic
leukemia… just
so you know.
Again, the chart
is what… email
me tonight… and
say Jim you are
an idiot… this
must go down…
there certainty
in their dogment
does irritate
me… okay, Jim
you don’t have
Celgene at all…
it is going
lower… all I
know is that I
have been in
this stock for
many years and
it has made a
lot of money…
and it because
of the
fundamentals,
not the charts…
Revlimid has
over a 100
potential
indications… and
for the disease
that it has
already proved
to treat… I
think it is
practically a
wonder drug… the
1 year survival
rate for
patients with
multiple
Myeloma… kind of
blood cancer…
who take
Revlimid 96%…
highest survival
rate out there…
I think that
fact alone
should make
Revlimid the
front line
standard of care
for the disease…
displacing the
current front
line which is
stem cell
transplants… the
transition of
Revlimid could
make Celgene a
fortune… it is
not just about
Revlimid… they
also bought
Pharmion, got
the rights back
for a drug
called Phydasea,
that treats
acute leukemia…
has a 10 year
marketing
exclusively
agreement in
Europe… I think
the Pharmion
acquisition will
be more added to
Celgene’s
earnings in 2009
than most
investors expect
okay… it has got
a brand new
product over the
companies fixed
cost base.
Now, again,
let’s go back…
this has
plummeted from
$77 where we
actually told
people to sell…
but investors…
but we did tell
people to get
back in though…
and I have been
buying it for my
trust… they have
been selling the
winners in high
multiple names…
that is what the
market has been
doing… Celgene
was expensive at
$77... but at
$49.92 I will
take my chances,
okay… I know the
stock has been
underperforming…
there are fears
the company will
lower its
earnings growth
forecast… it
did… at JP
Morgans health
care conference,
management
lowered guidance
because of
currency
translations…
and a more
conservative
outlook… but
they are still
saying that
growth is going
to be 25 to 30%…
okay… I don’t
have any stocks
that have that
kind of growth
other than
Research In
Motion.. .and a
stock like that
deserves more
than a 22
multiple…
although
Research In
Motion sells at
15 time
earnings… plus
give me
Celgene’s
history of under
promise and over
deliver… I think
that there is a
good chance that
the numbers are
too
conservative.
Here is the
bottom line…
▼ ▼
▼ ▼
▼
The Bottom Line!:
The chart says it is
absolutely time to
put Biotech in the
sell block… they are
adamant about it…
the fundamentals
look good to me…
especially Celgene…
the worst stock when
it comes to the
chart of any of the
Biotechs… and yet
the cheapest of the
bunch...
The chart says
Biotech’s a sell,
but I think you
should consider the
fundamentals & buy
Celgene Corporation (CELG*)...
[verbatim recap]
▼ ▼
▼ ▼
▼
Jim went on after
this segment to take
questions from
callers, and
responded with his
comments...
``````````````````````````````````````````````````````````````````````````````````
Q:
I am 19
years, and I am
wondering if you
still like
Celgene (CELG*)
as a long term
play?
Jim:
Yeah, it’s
interesting… I
am in a panic
here…we had a 62
year old at the
top of the show,
I told him not
to mess with
common stocks,
he is in
retirement… it
is too
dangerous… now
we have a 19
year old,
Michael from
Pennsylvania, he
is exactly who
should be
messing with
common stocks…he
has his whole
life ahead of
em… he is at
19... if the
chartists are
right about
Celgene and it
goes down a lot…
he can buy more
Celgene…it is
worth a lot of
money as it goes
down.. the
answer, Michael,
to you is yes
Celgene… buy it
here… buy 25
here… when it
goes to $45 buy
25... and then
at $40 the
chartists will
love it and you
will buy 50...
then you will
have 100 shares…
and you will be
proud.
``````````````````````````````````````````````````````````````````````````````````
Q:
Why is this
stock
Intuitive Surgical Inc. (ISRG),
it used to be
another name, it
used to be Computer
Motions Inc. in
Washington, Ca. but
now it is Intuitive
Surgical, and I am
kind of curious why
is this stock coming
up short?
Jim:
Okay, these are
what is known as
high multiple stocks
once they screw up…
once they have a
problem… and go to
Surgical, you can
ask them… they
disappointed… once
they disappoint then
it is very hard to
figure out what
price you want to
pay for it… what so
called price to
earnings multiple
you put on those
earnings… because
the earnings are
going down.. .and
when the earnings
are going down, the
multiple shrinks…
where they are
willing to pay less
for those… the
answer is Intuitive
Surgical… I think
the stock has had
it… every time it
rallies above $100,
I want you to sell
the stock.
``````````````````````````````````````````````````````````````````````````````````
[verbatim recap]
[end of segment]
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