Saturday, July 08, 2006

To buy or not to Buy

I am have been reading about stocks for quite sometime, six months to be precise. After setting my sights for sometime, I feel its time to plunge and invest in Amgen (AMGN).

What: AMGN is a global biotechnology company that operates in one business segment: human therapeutics.

Stock Price: 66.45 PE: 21.6 Fwd_PE:18.90 52W_Low:63.75 52W_High:86.92 Beta: 0.8
Dividend: 0, Sales: 12.72B Debt/Equity: 0.41 Book Value/Share:14.75 Quick ratio: 1.3
Leverage ratio: 1.8 Price to cash flow: 16 5YR_ROA: 6.9

Analyst Ratings: 9/10 (MSN), in general buy or hold rating

Conditions Met:
Stock price near the 52 week low
Sales should be above $40 Million
StockScouter rating should be 9 or above
Institutional ownership should be above 40%
PE should be within 25
Book value should be positive
debt to Equity is less than 1
Quick ratio is 1 or higher
Leverage ratio near to 1 and less than 15 (close to industry average)
Price to cash flow is positive
5 year Return on asset (ROA) should 6 or above.
The price chart is climbing up

Conditions Not met
Insider trading – Two major executive sold shares
Debt to Equity ratio is higher than industry average
Does not pay dividends

Selling Price
If stocks falls more than 15% below purchase price
Target Price: 93

The company is large and got couple of good drugs in its portfolio. In general I feel the company is confident and is not reckless. I plan to keep the stock for 2 years (will keep revising the target price)

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1 comment:

B&I said...

After i posted this, the stock has come down to 64.35. Good thing i didnt buy. i am going to wait how the stock will do on monday. plus analyst are saying amgen isnt growing as fast as it used to. that to me is a good sign, it reaching entering the stable company phase.