Saturday, April 2, 2016

"Yellen, Chair of the Federal Reserve and Economist, holds off on an interest rate hike and the market is smiling for a change. Here are a few value investment ideas and a couple of Bio-tech speculative picks for you."

Dow Jones Industrial Average 17,792.75 (Up) Week ending 04-01-2016

Sorry for being away and not writing my blog. My paying job gets ranked first in the pecking order and I was also traveling. The markets have filled back in nicely here, but there are still some bargains to be found out there. 

One company that I like based on my value criteria is JetBlue Airways Corp. (Symbol JBLU, $21.33). I had purchased this stock before I had heard any rumors about an interest in Virgin America Airways. This company has a current PE or 10.83 and a forward PE of 8.55.

The company is projecting earnings of $1.97 per share for 2016 and $2.49 per share for 2017.  Q/Q earnings were up 115.40% and the Sales Q/Q are up + 10.2 % . The company operates at Gross Margins of 68.7%.

JetBlue fits well with my investment parameters with a PEG Ratio of 0.32 and a Return on Equity of 23.10%. The company pays no dividend currently.

The company trades at a price to Book value P/B of 2.12 to 1 and trades at price to forward cash flow of 10.42. I like companies that trade at less than 3 Times current book value , (P/B),  and with a P/FCF of under 10.00. 

My next pick is a Closed-End management fund named , Tekla Healthcare Investors (Symbol HQH, $24.52) located in Boston, MA. First off, the fund boost a dividend yield of 9.95% and they reinvest your dividend in more shares so you have a compounding effect with your money. 

The fund has a PE of 8.9 and produced earnings of $2.76 per share. 

The thing I really like is that this fund trades at a Price to Current book value of 0.85 (P/B). So if they ever liquidated the fund you would have an instant 15% gain. The fund currently has a Return on Equity of 30.60. 

Quarter over quarter sales were up 170% and EPS for the last 5 years ave averaged 27% gain year. 

......... And now for some fun speculative Biotech-Pharma picks for you. This is for money that you would spend on the lottery or gamble at the casino, money that you could sustain a loss on with these investments. I own a little each of these.

Depomed (Symbol DEPO, $14.38).  Depomed is a specialty pharmaceutical company focused on pain management and other central nervous system conditions. Depomed has sales and products already to market and have a 5 Year growth rate of 33.52%. They just had their patents upheld in court against Purdue Pharmaceuticals.

Egalet (Symbol EGLT, $6.89). 

First of all the company is holding $5.81 per share in cash on the balance sheet so you are getting the rest of the company for practically nothing. "Egalet, is a fully integrated specialty pharmaceutical company, focused on developing and commercializing medicines for patients with moderate to severe pain. It has the first and only approved immediate-release oxycodone product formulated to deter abuse via snorting, for the management of acute and chronic moderate to severe pain where the use of an opioid analgesic is appropriate." Quarter over Quarter Sales/Revenue is +387.30% and next year earnings are projected to be up 63.7%. Analysts have a target price for EGLT of $18.20. and chronic pain while helping to protect physicians, families, and communities from the burden of abuse.
Flexion Therapeutics, Inc. (Symbol FLXN, $9.42) is the most speculative pick of the three picks because they do not have a product to market yet so no sales revenue.  "Flexion Therapeutics is a specialty pharmaceutical company focused on the development and commercialization of novel non-opioid pain therapies. The company is currently advancing a portfolio of injectable drug candidates that have the potential to provide better and more persistent analgesia compared with existing therapies." They are very well financed with a Current Ratio of 13.80. The price to Book value P/B is 1.95. The target price by analysts on the stock is $35.50 per share. Be careful with any of these three. They are to add a small position to your already well invested and diversified portfolio.

NCAA Final Four college basketball tonight here is the USA.  Go Villanova Wildcats, our local Philadelphia, PA. entrant in the fray.


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