Celgene Corporation (CELG)

Medical Stocks have been showing continued strength with the overall market uncertain if the correction has ended or the current uptrend is just a pause before another leg down for the markets. Celgene Corp is one of the strongest of the medical/biological companies that should continue to appreciate in value.

Analysts Upgrades & Sales Growth

            Analysts continue to upgrade their earnings expectations for the company with nine of eighteen analysts raising their outlooks for the current quarter in the past seven days. Current earnings growth estimates are for a 34.5% increase in earnings for the quarter vs. last years same quarter. Sales revenues have also been increasing steadily with current quarter growth estimated to be 69% and next quarter’s growth estimated to be 54%.

Price/Earnings and Beta

            The forwarding looking price to earnings for Celgene Corp is currently 33.11. This compared to the earnings and revenue growth mentioned above makes the stock reasonably priced for the growth the company is experiencing. This stock also has a very low beta value of 0.24 which leads one to the conclusion that the stock will steadily move in the current pattern without any abrupt moves to the downside.

Options

            Options activity for the stock is not overly active but there is a definite bias to the upside in the volume numbers of the Calls vs. the volume of the Puts. This is true for August options where the 75 Calls have a decent amount of volume and in September where the 80 and 85 Call options have much more volume than any of the Puts available.

The Trade

            Build a long position in Celgene Corp over the next week and place a stop 5% below your average purchase price. Take profits as desired or after a large move of 5% or more to the upside in any given day.