Markets were flat last week, with the S&P 500 advancing 0.3% and the Nasdaq edging up less than 0.2%. But with this week marking the end of the quarter, portfolio managers will be “window dressing” their portfolios by buying winners from the recent stock market rally. This situation should help stocks resume their upward course in the week ahead.
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You already have some big gains in your Bull Market Alert portfolio, with your remaining Alexion (ALXN) and Intuitive Surgical (ISRG) options up 180.54% and 96.97%, respectively. The Companhia de Bebidas Das Americas (ABV) options I recommended last Monday are up 37% in just five trading days. I’ve set a goal of 200% gains in ALXN and 100% gains in ISRG, so I’m going to hold off on recommending that you take profits on these positions at this time. But once they pass these critical thresholds, I’ll be recommending that you lock in your profits by sending you a Special Alert.
This week’s Bull Market Alert pick revisits Novo Nordisk A/S (NVO), a Danish pharmaceutical company that focuses on diabetes care and biopharmaceuticals. Novo Nordisk is a quiet giant, employing 30,000 people in 76 countries, including the United States, Japan, China, Russia, India, Brazil and Turkey.
I find the short- and long-term investment case for NVO as compelling as any idea out there. Here’s why. More than 200 million people worldwide suffer from some form of diabetes. Patients with type 1 (juvenile) diabetes can’t make insulin at all and need to inject it their whole lives. Type 2 diabetes — the kind you get from eating too much and not exercising — now is much more common. Today, more than 26 million Americans have diabetes and another 79 million have pre-diabetes. Experts calculate that by 2050, one in three American adults will suffer from the full-blown disease. And as China, India and the rest of the emerging world adopt Western lifestyles and diets, diabetes is surging there, as well.
No wonder that the treatment of diabetes through insulin has emerged as one of the world’s great growth stories. Worldwide insulin sales have quadrupled in the last decade to $15.4 billion. As diabetes specialist David Nathan of Massachusetts General Hospital observed, “The market for insulin is almost endless. It is going up and up and up. It is not even close to the peak.”
Today, NVO is the world’s largest insulin maker with a 50% share of the global market. Equally importantly, it has a strong research and development (R&D) pipeline of future products to treat diabetes to keep its competitors at bay. NVO recently filed for approval of its new drugs Degludec and DegludecPlus. It has another drug for type 2 diabetes, IDegLira, in Phase 3. Five other drugs for type 2 diabetes are in earlier stages of the R&D pipeline. All of these add up to terrific prospects for NVO in the years ahead.
So buy Novo Nordisk A/S (NVO) at market today and set your stop at $128.00. If you want to play the options, I recommend the June $140 calls (NVO120616C00140000), which last traded at $6.70.
Portfolio Update
Alexion Pharmaceuticals (ALXN) repeated last week’s performance and gained 5.50%. Barron’s Online published its annual list of the top 30 CEOs over the weekend, and Alexion CEO Leonard Bell made the cut. Warren Buffett and Amazon’s Jeff Bezos hold spots on the same listing. With Alexion up 250% over the past two years, Bell clearly is doing something right. ALXN is a BUY.
Bank of Ireland (IRE) lost 9.92% last week, dropping back to its 50-day moving average. Citigroup initiated coverage of IRE last Thursday and reported that IRE’s restructuring is proceeding according to plan; that IRE is well capitalized; and that the company holds a strong position in the Irish marketplace. IRE is a BUY.
National Bank of Greece SA (NBG) dropped 4.32% over the past five trading days. Fitch Ratings has affirmed National Bank of Greece’s (NBG) rating at ‘B-‘ but removed it from “negative watch.” Fitch’s also revised judgment of external support for Greek banks’ recapitalization following the new private sector involvement debt exchange agreed in early March 2012. These developments support the case for Greece’s eventual recovery. NBG is a HOLD.
Companhia de Bebidas Das Americas (ABV) jumped 4.50%, moving up each day last week. ABV’s management sees a positive outlook for 2012 and expects revenue to increase due to higher Brazilian household disposable income. ABV is a BUY.
MasterCard Inc. (MA) gained 0.91%. Rival Discover Financial Services (DFS) beat analyst expectations last week and posted a 36% increase in first quarter profit. MasterCard and its other competitors — Discover, Visa and American Express — are all experiencing large increases in credit card use. MA will pay a $0.30 dividend on April 4. MA is a BUY.
Ford Motor Co. (F) dipped 1.52% last week. The Barron’s report on the top 30 CEOs also included Ford’s CEO Alan Mulally. Ford also laid the cornerstone for a new $1 billion dollar factory in India on Thursday, pressing ahead with expansion plans in Asia’s third largest economy. F is a HOLD.
Intuitive Surgical, Inc. (ISRG) added 0.69% over the past five trading days. Growth is the name of the game and ISRG is delivering in spades. Earnings growth is at 24.8%, revenue growth is 27.6%, and operating income is projected to grow 40%. In fact, had you invested $100,000 in ISRG ten years ago, you would be sitting on a $2.3 million dollar pile of money today. ISRG is a BUY.
Melco Crown (MPEL) was flat for the week. Since MPEL started its run in December 2011, it has only dipped three times — and those have been small and short-lived. Look to add to your position sooner rather than later. MPEL is a BUY.
Life Technologies (LIFE) rose 2.82% over the past five trading days. LIFE announced the launch of a new breakthrough technology named GeneArt Precision TALs, which allows researchers to “edit genomes and control gene activity with unprecedented precision and reliability.” Punching through its 50-day moving average on Friday, LIFE is now a BUY.
Altisource Portfolio Solutions (ASPS) gained 1.15% last week. Directors Timo Vatto and Linn Michael purchased 2,000 and 2,500 shares of ASPS, respectively. Insiders sell for many reasons, but buy for only one reason — they expect the stock price to increase. ASPS is a BUY.
Monster Beverage Corp. (MNST) added 1.66%. MNST captured fourth place on a list of top large-cap beverage stocks, on both NYSE and NASDAQ, based on earnings per share (EPS). Monster’s trailing-twelve-month EPS is $1.53. MNST is a BUY.
Dick’s Sporting Goods (DKS) rose 3.58% over the previous week. After spending the previous two weeks trading sideways, DKS came back to life last week and made a new 52-week high. Dick’s also opened its first store in New Mexico last Wednesday. This is Dick’s 484th store, bringing its total U.S. presence to 43 states nationwide. DKS is a BUY.
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