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HarryCarysGhost (99.70)

My pitch for Charles River

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6

June 26, 2010 – Comments (2) | RELATED TICKERS: CRL

Charles River Laboratories International.

While channel surfing some random pundit mentioned this stock as one of four that would make you money in 2011. Since I’ve never heard of it some digging was in order.

Ok lets see what we got here- a Large Cap (2.35B) pharma.

Trailing P/E- 21.84

Forward P/E- 13.58

Expected Revenue Growth 3y- 2.30%

Expected Revenue Growth 5y- 5.69%

16 Analyst estimates peg their earnings for full year 2010 to be at 2.21

Full year 2011 2.61

So that means you can expect earnings to be somewhere between three dollars and zero.

Now lets take a look at there 1.6 Billion dollar acquisition of WuXi PharmaTech.

Charles River Laboratories, WuXi PharmaTech: A Little Medicine for a Big Pharma Deal

This could be the wild card Since China could simply take it’s ball and go home. If the deal goes down I think it would solidify the company going forward. If not Hey they still have 1.6 Billion dollars to play with.

Which brings us to debt.

Total debt -474.25M (and rising I would imagine)

Total cash -233.73M

Not numbers that would make me drool, but not horrible either.

If one were to look at the chart, one would see a bunch of squiggly lines that move up or down for no apparent reason.( apologies in advance to all the chartists out there, obviously I’m not one of them : ) Seriously this stock likes too dive more then an argentinian cliff diver looking for quarters. So you may want to wait for a pullback.

Now for brass tax, would I be a buyer of Charles River, in a word no. Would I rate it Outperform an Caps, in a word yes.

The first reason would be from the lessons learned by Warren Buffett, Big Pharma is not something that I would consider to be in my circle of competence. So why go there. No doubt there is money to be made in healthcare and pharmaceutics, but it will have to be made from someone other then I.

The second reason I would not be investing in Charles river, Is a moral issue. They do a lot of testing of medical products on animals. And now that their teaming up with China can you imagine the atrocities that will happen over there. Normally I do not let my morals and emotions interfere with investments, but in this case I would have to.

If you can look your pet in the eye after buying, then hey have at it, I’ll pass since my dog has been giving me dirty looks for even researching this company.

2 Comments – Post Your Own

#1) On June 26, 2010 at 5:44 PM, SockMarket (42.43) wrote:

good writeup. +1

If one were to look at the chart, one would see a bunch of squiggly lines that move up or down for no apparent reason

lol.

only one note: it is brass tacks, I believe. Not tax.

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#2) On June 26, 2010 at 6:48 PM, HarryCarysGhost (99.70) wrote:

What is "Brass Tax"?

Yes, You are correct sir!

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