To generate superior returns in your stock market investments, you must be able to identify which stocks are going to stay on the front burner of both the financial analysts and the fund managers. The analysts are key drivers of stock price because they bring a company to the attention of the tens of thousands of retail investors who have professionals managing their money. And the fund managers – mutual funds, hedge funds, endowments – are also key drivers because only their large purchasing power has the ability to reduce the supply of shares on offer which, in turn, causes stocks to rally.
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It is not easy identifying such stocks. But there are clues. We at IXTHYS, using Dr. Carr’s proprietary analysis systems, have been able to specify exactly the characteristics most positively correlated with long-term gains in stock price. These same traits are what bring great companies to the attention of analysts and fund managers. Such traits include superior growth in sales and earnings over recent quarters as the company organically grows its footprint in the industry is one such clue; superior products and services with increasing demand is another; reasonable valuation metrics; a stable and expanding industry; strong returns on equity; upward earnings estimates revisions; and a healthy price chart.
The following five stocks possess a number of these qualities. Dr. Carr's proprietary analysis suggests that they should show strong outperformance in the year (and years) ahead. We like all of them as long-term investments. Of course, we will need the broader market to cooperate. A down market cycle will undermine the bullish thesis on even the best of stocks. But given the market strength we’ve seen so far in 2015, we have every reason to expect a decent performance from 2016.
Celgene is one of the world’s leading biotech stocks. It is one of only 16 biotech companies that actually earns a profit. Shares trade at reasonable valuations and the company has a ton of cash on hand.
Celgene has been an institutional favorite for three years now, thanks to Revlimid, Celgene’s blockbuster treatment for multiple myeloma. Sales were up 16% in 2014 and 17% so far in 2015, including a 26% jump here in the U.S. Even better news: Celegene is testing multiple avenues for label expansion for Revlimid and so far, things look pretty good.
Celgene has a number of other drugs that are doing well, such as its recently launched Otezla for plaque psoriasis, and Abraxane for certain breast and lung cancers, as well as a few other drugs in Phase II trials. Earlier this year, Celgene paid $7.2 billion to buy Receptos, largely to get its hands on Ozanimod, a treatment for multiple sclerosis and colitis which is in late-stage trials and looks very promising. Celgene also sees Ozanimod as a treatment for Crohn’s disease, making the drug a potential mega-blockbuster. Ozanimod is expected to market in 2017 for MS, and 2018 for colitis, which should keep a steady bid under CELG shares in 2016.
As the chart below shows, shares of CELG were relatively flat in 2015, with quite a bit of volatility around the Receptos purchase. $140 is the all-time high for CELG and that looks set to break soon given the current uptrend.
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