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XMFHelical (< 20)

Diagnsotics for my CAPS port



October 17, 2007 – Comments (3)

No, I'm not going to blog with a critique of my CAPS port.  I'm going to add some medical diagnostic companies to it and do so on the fly.

Yesterday I blogged about the Healthshares ETFs that I dislike and also that they were dragging down my portfolio.  The biggest drag right now is from HHD - a port of medical diagnostic companies, many of which I'm bullish on.  So let me go through the holding with a quick screen and see whether I would like to add any that I don't have.

Note: While I believe that medical diagnostics will be a major revolution in the next 10 - 20 years, that doesn't mean that it makes for a good investment.

The holdings are:

BCR    Bard

BEC    Becman Coulter

BIO     Bio Rad Labs

CYTC   Cytyc

CRA    Celera

DADA  Dade

GPRO  GenProbe

HOLX   Hologic

IDXX     Idexx

BLUD   Immucor [BLUD - blood, HA HA very funny]

IMA      Invesrness Medical

LH       Laboratory Corp

MMSI   Meit Medical Systems

MYGN  Myriad Genetics

VIVO    Meridian Bioscience [Another ticker comedian]

OSUR  Ora Sure

QDEL   Quidel

RMD    Res Med Inc

SONO  Sonosite

TECH   Techne

VAR     Varian Medical Systems

VMSI    Ventana Medical

I bolded those I have already in CAPS, I don't own any.  Now while I know many of these companies, I honestly don't know them all.  I'm bullish on diagnostics, but.....that may not be the right call.  I would note that Abbott not to long ago tried to sell off their diagnostics business (sans diabetes) to GE, but it got kicked back.  Also, the recent earnings report from Roche (not CAPS eligible - no ADR) did not have particularly strong growth in the diagnostic unit (it grew, but not strongly).  Much of this is dominated by diabetes testing still however.

I want to screen these companies for improving earnings, improving ROE - ROA, and those not trading at a large premium to recent historical P/E ranges.  I will use Morningstar charts and the script that Rhamelink but together (and posted on the BMW board - he said OK top share). [type in ticker]

Is that a slick tool or what (find him?, thank him).

So what is interesting.

Celera - still not profitable but making acquisitions toward becoming so.  I still hate the oversized cash horde, but it may be near time to be bullish on them.  I've had them as underperform in the past, but won't do so again. Watchlist.

Bio Rad - maybe I should end this one.  Love the company but it may have gotten ahead of itself.

Dade - All looks good except the huge pop in July due to an offer from Siemens.  Little upside here (and I have Siemans already).

GPRO - but as an underperform - the high PE has always scared me here and it's been creeping higher each year. I don't see improved profitability metrics [of course I'm not here for underperforms].  Idexx may be worth a short term underperform as well.

Immucor (BLUD) looks like a candidate - profitability is off a bit, but strong and P/E is dipping (but still high).  Certainly a recession protected stock, but could see multiple compression.

Inverness (IMA)? this serial acquirer should another underperform candidate.

Lab Corp - Looks worthwhile and should benefit from the diagnostic revolution in general.

Merit (MMSI) is a tough call - but I'm inclined to think they may have bottomed.

Meridian (VIVO) - watchlist and wait for a pullback, but not willing to call underperform due to strong and improving profitability metrics. Quidel as well.

Sonosite is another tough call.  Is the market really big enough for hand held ultrasound.  Not sure. 

Techne is another tough call.  Can the profitability keep up?  It is dipping but from a high point.  worth a flyer IMO.

Ventana is mid-maybe with Roche - so I'll sit that one out as well.

So, overall, I feel good about my underperform on HDD.  Many of the holdings are due for a pullback and past performance has been driven by some key acquisitions.

I'll end my Biorad and wait for a pull back.

I'll call underperform on valuation for GPRO and IMA

Outperform (3y) on BLUD, LH, MMSI, TECH

Watchlist CRA and VIVO.

Over the next 2 weeks I'll learn more about my picks and blog on each.  Then do this again with another healthshares fund.







3 Comments – Post Your Own

#1) On October 19, 2007 at 3:33 PM, XMFHelical (< 20) wrote:

That's a lot of recs (and late arriving) for one of my blogs - did I get linked somewhere?


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#2) On October 23, 2007 at 11:16 AM, TranGanZen (31.26) wrote:

A very cool tool indeed! However my only complaint would be that there is not any information on how to interpit these kinds of charts. OK call me uneducated on this type of analisys tool, but I do get a general idea on what the information gives. Do you have any good links on what trends to look for on this kind of tool. For example, someone looking for momentum in a stock is going to look for different trends than someone looking to find a bargain price stock. Different investors go for different stratagies.

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#3) On October 29, 2007 at 11:37 PM, TMFSarahGen (98.03) wrote:

Hi Zz, this is great.  Med diagnostics is so hot right now.  Thanks for going through the etf!   I know this is an older blog post, but I'm working my way back - was traveling for a week, and I'm still massively behind. 

I was really into SONO (an RB pick), because they were first and biggest in portable ultrasound, but I thought GE was eating their lunch...

And all I know about IMA is that Cramer loves it. 

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