The Iconoclast Investor

Moving on to investments, and sticking with the health care theme, I want to remind you of Cubist Pharmaceuticals (CBST). Cubist has earned a spot in Cabot Top Ten Report four times since September.  In last week’s issue, here’s what editor Michael Cintolo wrote.

“Despite the numerous advances made in medicine in recent decades, the basic science of infection control remains a challenge. We all know that one of the risks of entering a hospital is acquiring an infection. And one of the most common challenges is fighting infections of the skin and bloodstream. Addressing this challenge, and making money while doing it, is the focus of Cubist, which until recently received all its revenues from CUBICIN, a once-daily IV bacterial antibiotic approved for treatment of skin, skin structure and bloodstream infections, including infective endocarditis. Its second product is MERREM, used for difficult skin infections, which began contributing to revenues in July. Cubist is also working on products that target infection in the liver, in the gastrointestinal tract and during on-pump cardiothoracic surgery. Third quarter earnings, released three weeks ago, were terrific, and led to increases in analysts’ estimates. We like the growth, we like the healthy margins and we like the still-reasonable valuation.”

Cubist is one of the very few stocks today that is truly acting well.  In short, institutions that are getting to know the stocks are steadily climbing on board, reasoning that future earnings growth in this mass-market industry will be very rewarding.

The broad market is still not in a bullish phase; buying anything still brings plenty of risk.  But if you’ve got an itchy trigger finger, CBST is worth considering.