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JimVanMeerten (62.25)

H1N1 - AZN, NVS or GSK?

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October 06, 2009 – Comments (2) | RELATED TICKERS: AZN , GSK , NVS

The whole world seems to be fixated on the economy and the H1N1 Swine Flu. News reports today that the first shipments of the nasal version of the vaccine, manufactured by MedImmune a unit of AstraZeneca, will begin today pushed me to find out if there might be an investing play in this fear. The major manufacturers of the vaccine are GlaxoSmithKline (GSK), Sanofi-Aventis (SNY), Novartis (NVS), AstraZeneca (AZN), Baxter Intl (BAX) and CSL Ltd (CMXHF). None of these are pure plays. Each of these companies has a stable of drugs and products so you are really buying a basket of widely varied profit centers. How do I find the best one?

First, I always go to BarChart for technical analysis to find which stock is moving right now. BarChart uses a combination of 13 different technical analysis indicators and then uses an average to see which has the most votes. The ratings were from a low for AZN of 40% SELL to a high for NVS with a 96% BUY, so for me it's easy to see which one warrants further review.

Next, I look at the fundamentals. Since NVS wins on a TA basis what about the buzz in the news and fundamental side? Right now the consensus of the 5 analyst following the stock is that NVS will have year over year growth in both revenue and earnings. Both Citigroup and Jefferies have recently given BUY recommendations and JP Morgan has it rated an Overweight.

This is how I look for the stocks that I recommend. Is the stock having current upward price movement and are there analysts giving the stock positive price recommendations that will keep driving the stock upward. That may may sound too simple but it works. Your ultimate goal in portfolio management should be to buy stocks trading above their Daily Moving Averages and eliminate stocks trading below their Daily Moving Averages. You beat the average by having an above average portfolio.

Recommendation: Buy Novartis (NVS) around 50 and place a stop loss near the 50 DMA of 47.

Jim Van Meerten is an investor who blogs about financial matters on Financial Tides, MSN Top Stock Blog and Seeking Alpha. Please leave a comment below or email to FinancialTides@gmail.com.

Disclosure: I don't hold actual positions in any of the stocks mentioned in this blog. Normally, I include my recommendations in my Wall Street Survivor portfolio for accountability but on this date I only have buying power of $11K so I can only add 212 shares. Wish I could have bought more.

2 Comments – Post Your Own

#1) On October 06, 2009 at 11:44 AM, Deepfryer (27.64) wrote:

I thought everyone had forgotten about that already? It's just the flu.

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#2) On October 06, 2009 at 12:38 PM, leohaas (31.34) wrote:

Profit margins on flu vaccines are low. That is why so few companies are in this business. And since none of them depends for a significant part on flu vaccine profits, this in a non-issue.

Your analysis, both fundamental and technical is acually pretty good. There is nothing wrong buying NVS around $50. But it has little to do with the potential of an upcoming H1N1 pandemic.

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