If you want to be a big winner in the market, you simply can’t hang back with the crowd. You’ve got to think for yourself, imagine alternative scenarios, notice what’s happening outside the world of groupthink. When you do, you’ll find opportunities like Isis Pharmaceuticals (ISIS).
Isis earned a spot in Cabot Top Ten Report back on August 18, thanks to its strong performance. Here’s what Editor Michael Cintolo wrote.
“Pharmaceuticals are showing up in these pages with increasing frequency as investors, hungry for a little alpha, look to the big moves these companies can make when good news hits. Isis Pharmaceuticals works primarily with an RNA-based technology called antisense. Antisense drugs prevent cells from manufacturing specific proteins that are involved in disease. The technology has huge potential, and … the company just got a boost when it swung to a small quarterly profit based in part on sales of Vitravene, an antisense drug used to treat cytomegalovirus retinitis in people with AIDS. With an anti-cholesterol drug in Phase III trials and five other drugs in Phase II trials, the company looks to be due for some investor-pleasing headlines.”
Back when Mike wrote that, the stock had jumped from 16 to 19 on the good news about Vitravene. Since then, it’s pulled back in a calm and controlled way to 17 1/2. Technically, it’s a very promising pattern.
Fundamentally, my examination of the company reveals triple digit growth of revenues in recent quarters (a common hallmark of big winners … although part of that is from one-time milestone payments) and analysts have recently increased their earnings estimates for the company for both 2008 and 2009. Like many fast-growing companies with great potential, ISIS is expensive; its current PE ratio is 78. But that’s how it is with the best growth companies!
Bottom line, ISIS looks attractive from both a technical and fundamental perspective. The fly in the ointment remains the general stock market, which is still building a bottom.