Betting on Bounce in the World’s #1 Insulin Play

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

It was a flat week for U.S. and global stock markets, as the Dow Jones rose 0.64% and the S&P 500 was up 0.17%. The MCSI Emerging Markets Index ended the week essentially even.

Last week’s Bull Market Alert recommendation, Northern Tier Energy Trust LP (NTI), gained 3.32% for its first week in the portfolio. Otherwise, it was a “risk off” week for your bets on European banks, all of which pulled back. Look for Qihoo 360 Technology (QIHU) earnings on March 5 after markets close. Those results may move the stock.

This week’s Bull Market Alert pick revisits Novo Nordisk A/S (NVO), a Danish pharmaceutical company that also is the world’s largest insulin maker with a 50% share of the global market.

Novo Nordisk estimates that there are more than 370 million people with diabetes in the world today — including 90 million in China alone. 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. 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.” By 2030, over 550 million people across the globe will be suffering from the disease.

On Feb. 11, Novo Nordisk stock dropped as much as 17% in response to the FDA request for more testing on the company’s latest insulin treatment, Tresiba, in the approval pipeline. Despite both Europe and Japan having approved Tresiba, the FDA has now asked for a new study on the drug’s cardiovascular effects prior to approval.

Exclusive  New Green Leadership

I believe the market overreacted and that the setback for Tresiba is hardly a disaster. The delay would have no impact on Novo Nordisk’s financial results for the fiscal year. And Novo Nordisk still has the Insulin detemir, a long-acting human insulin analogue for maintaining the basal level of insulin. The company also has a strong pipeline and its fundamentals remain strong. The market agrees and the stock has resumed a steady ascent.

Novo Nordisk trades at a price/earnings ratio of 21. Its share count has also fallen from over 640 million in fiscal 2009 to 580 million at the end of 2012 as part of management’s stock buyback plan. That will boost earnings per share in the future.

So buy Novo Nordisk A/S (NVO) at market today, and place your stop at $164.00. If you want to play the options, I recommend long-dated September $180 calls (NVO130921C00180000).

Portfolio Update

Bank of Ireland (IRE) lost 6.73% over the five-day trading week. Finance Minister Michael Noonan made positive remarks last Tuesday, stating that Ireland will begin withdrawing its “banking safety net” (a.k.a., bank guarantee scheme) at the end of March. This is a positive sign that things are looking up for the Irish financial system. Falling below its 50-day moving average (MA), IRE is now a HOLD.

National Bank of Greece SA (NBG) fell 8.89% last week. Greece is still not out of the woods as far as its economic recovery is concerned. However, NBG remains one of the four major banks that the government will protect as NBG, Alpha, Piraeus and Eurobank will be key lenders to businesses when Greece’s economic recovery begins to gain steam. NBG is a HOLD for now.

Exclusive  Oracle and Walmart May Save TikTok from Turbulence in the Cloud

Qihoo 360 Technology (QIHU) dipped 1.23%, though it jumped 4.13% on Friday alone. QIHU completed a convincing bounce off of its 50-day MA last week — a move that may spell future upside. QIHU’s president of Chinese Internet services and security software announced last Wednesday that its goal is to capture 10% of China’s PC search market every year for the next three years. QIHU will report earnings on March 5 after markets close. QIHU is a BUY.

Fomento Economico Mexicano SAB (FMX) fell 4.16% last week, despite issuing a strong earnings report. This makes the sale of half of your options position last week particularly well timed. FMX reported a 35% year-over-year rise in net profits and strong increases in sales figures after recent regional bottler acquisitions. With the market overreacting, FMX is a BUY.

Banco Santander, S.A. (SAN) lost 3.60% over the past five trading days. Although SAN has exhibited some weakness as of late, SAN is expecting healthy revenue growth and solid return-on-equity over the coming quarters. SAN is a HOLD.

Market Vectors Vietnam ETF (VNM) gave back 2.65% last week. Recent selling in VNM abated last week as this Vietnam exchange-traded fund found good support at its 50-day MA. This is an ideal time to add to your position. VNM is a BUY.

Northern Tier Energy Trust LP (NTI) gained 3.32% during its first week in the Bull Market Alert portfolio. NTI will report earnings on March 14 before markets open. NTI is benefiting greatly from the regional flood of cheap Canadian and North Dakota crude oil. If its past 50% gain in earnings and 17.8% yield are any indication of future gains, earnings should be strong. NTI is a BUY.

Exclusive  Cannot Stop the Battery

Like This Article?
Now Get Our FREE Special Report:
Alternative Investing: Investing in Timber

Stock Investor editor Paul Dykewicz reveals why investing in timber may be one of the best long-term portfolio strategies you'll find today.

Get Access to the Report, 100% FREE

previous article

European investors awoke to a key change in their world on Monday. The Greek economy has been reclassified from a “developed” market to an “emerging” one by fund manager Russell Investments.


Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details


Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details


Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details


Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details


Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers:

Product Details


Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details


Used by financial advisors and individual investors all over the world, is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.