Good stocks in a bad market

Good stocks in a bad market

While Diabetic Investor does not necessarily like to make market calls, this is best left for the experts to get wrong; this summer is proving to be a difficult time. Oil prices continue to rise and it seems as though the Middle East tensions are once again building. The war in Iraq goes on while North Korea and Iran continue to saber rattle.

To some this just might be the time to pullback and take some profits. While taking profits is never a bad thing, market turmoil is also an opportunity. Looking over the diabetes sector Diabetic Investor sees some companies worth watching and buying on weakness.

Amylin (NASDAQ:AMLN) – Over the past 5 years shares of Amylin have risen nearly 400% and the best could be yet to come. With the long acting version of Byetta doing well in clinical trials and a rich pipeline of new drugs for diabetes and obesity, the company remains the most valuable property in the diabetes sector.
Novo Nordisk (NYSE:NVO) – Novo continues to gain share worldwide and has an impressive pipeline. The company may not be first to market with their drugs but their delivery systems are the best in the world and they know how to compete. Long term this stock will do very well.

PolyMedica (NASDAQ:PLMD) – We haven’t written much about PolyMedica this year but our view hasn’t changed one bite since we accurately predicted that the company wouldn’t suffer any repercussion from the government’s investigation and the company would be acquired. Even with all the speculation about the government moving towards competitive bidding and changing reimbursement rates, you can’t ignore their huge customer base and the best systems in the business. There is plenty of value here.

Becton Dickinson (NYSE:BDX) – Another company we haven’t written much about but that doesn’t mean there isn’t value here. While DI continues to question the company’s move into glucose monitoring, the needle and syringe business is stronger than ever. For all the hype surrounding inhaled insulin, people forget there are nearly 4.5 million insulin using patients in the United States, the majority of who inject insulin and won’t be switching to Exubera. Add in the increasing popularity of Byetta, another injectable drug, and you can see why DI hold the company in high regard.

Some may be curious how we see Dexcom (NASDAQ:DXCM) doing in the future and if now is the time to buy. The biggest question surrounding the company is just how many patients are using the system and how often. We may get our first clues when the company announces second quarter results next Thursday at 4:30 pm EST. Diabetic Investor believes that earlier views for the company may have been overly optimistic. However, the Navigator from Abbott (NYSE:ABT) is still not FDA approved and Medtronic (NYSE:MDT) is concentrating on the Paradigm® REAL-Time system. DI also believes the company will receive approval for their 7 day sensor which will give them a leg up on their one, possible two, competitors. In the long run we still believe the company will be acquired and there is value in continuous monitoring. Should the stock drop into the single digits DI would recommend loading up on shares. The risk is high but so too could be the reward.

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David Kliff
Diabetic Investor
847-634-4646 fax
224-715-3761 mobile