Stock Prospects, Downward Market Correction, and All That JAZZ Pharm

Six of the Top 20 stocks rated by Investor’s Business Daily (IBD) made our semi-final “buy” cut list. A market correction is due to occur, soon.

Friday’s DJIA is at an all-time high.

Dow Jones Industrial Average Since 2000

Dow Jones Industrial Average Since 2000

The timing on purchasing AMBA and AVG look best.

It has been since May and June 2012 that the high market values adjusted downward. Keep in mind that typically, a two to three week market correction of -8 to -15% happens every year.

#1-rated Green Mountain Coffee (GMCR), #8 Celgene (CELG), #10 Ambarella (AMBA), #11 AVG Technologies (AVG), #15 Activis (ACT), and #20 Jazz Pharmaceuticals (JAZZ) look the best to us. These are IBD’s ratings published in the Monday, August 5, 2013 Issue.

We have been recommending JAZZ for the last two years. Its return on earnings (ROE) is 44%!

At $76.23 per share, JAZZ has become pricier. Its Profit Earnings ratio (P/E) stands at 14. There are now 54 million shares outstanding. One thing to be aware of is its 38% debt. Before buying, set your high and low sell points.

GMCR was another company we recommended. Now is not a great time to reinvest in it. At $78.11 Green Mountain Coffee has turned into a blue-chip. Its ROE = 18% and P/E =27. There are now 125,000,000 shares outstanding. I personally am not a big fan of the Keurig single cup coffee system it markets but its product quality has been great for a dozen years.

CELG and ACT are two companies in the medicine and biotech industry that are valued at $147 and $139, respectively.

happy pills

ACT has fewer shares outstanding – 130 million – compared to CELG’s 407 million. CELG’s P/E = 27 and their ROE = 30%.

ACT, who recently acquired generic drug distributor Warner Chilcott, has a P/E = 21 and their ROE is 30%, Both are so high priced, I would not buy either without determining the most I could afford to lose AND what increase I would be happy to earn.

Our best ideas are with non-blue chippers within the high-technology sector, AMBA at $16.75 and AVG at $20.55 per share.

Note that at the end of the week 8/8/13,

AMBA was up 1.3% on Friday to $16.82,

AVG was up to $21.67.

Although AVG’s POE = 0, they are well-positioned in the computer security software market and with only 25 million shares outstanding their P/E = 11.

AMBA makes chips that are also included in popular cameras. AMBA’s ROE has been 38% and there are only 14 million shares outstanding. AMBA’s P/E = 18. These stocks are significantly more affordable that others previously discussed.

Good luck and enjoy the stock market games!

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Copyright MMXIII
– Max’s Scout Services & Communications, LLC –
[ for musement only ]


About Max's Scout Services and Communications of the Americas, LLC


Posted on August 5, 2013, in Risk Management, Socioeconomics, Stock and Commodities. Bookmark the permalink. 1 Comment.

  1. Look at these three biotech stocks:

    BMRN Biomarin at $64.25.
    DNDN at $3.39.
    IPML Impax Labs at $21.74.

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