Investment Ideas February 2015

American Express scored a double beat on its Q4 earnings report.The financial services titan reported earnings of 1.39 a share versus the estimate of 1.38;it had revenue of 9.11 billion versus the 8.53 billion estimate.CEO Ken Chenault attributed the company's success to the gain from the sale of AmEx's stake in Concur Inc;higher card member spending;increased loan balances;tighter control of expenses;and return of profit to shareholders.
There was an eight percent increase in spending by cardholders.*
We like dividend payers,said Doug Sandler,CFA of RiverFront Investment Group in Richmond,Virginia.They'll do fewer stupid things if they have to pay out.We like companies that cater to the middle class-retailers like drug stores,and homebuilders.*
The price of gold has increased this year,according to William Rhind,CEO of World Gold Trust Services.We've seen Russia going into the market buying more gold.I absolutely would agree investors should have 2-10% gold in a well-balanced portfolio.
We're seeing the paradigms of the last couple of years start to be questioned.Gold miners did well during the Great Depression.*
Biotech titan Amgen also reported a double beat.It reported earnings of 2.16 a share versus the estimate of 2.05;and revenue was 5.33 billion versus the estimate of 5.20 billion.The company reaffirmed its full year guidance.Its success was bolstered by drug price increases.*
Rite Aid Corp(RAD),iShares U.S. Home Construction ETF(ITB),Market Vectors Gold Miners ETF(GDX),Amgen(AMGN),American Express(AXP)

Where To Invest Summer 2014

Deutsche Bank downgraded Dollar General on margin concerns,but Goldman Sachs said the stock is too low,and we're gonna stand by it,CNBC host Jim Cramer said.Too many people downgraded it on what turned out to be a decent quarter.*
Target stores are looking a little dowdy.*
Teen apparel retailer Quiksilver,Inc's balance sheet's not that good there.They lost their surfer spokesman Kelly Slater.*
Union Pacific said autos are great.Once they start ramping up those factories so they can run more,it looks really good for the economy-sorry to be so cheerful.*
Salesforce.com is in that very challenged area.You saw that software as a service got hammered yesterday.It's not the place to be.*
Ford's May sales were up 3.0%,beating the Edmunds estimate of 0.9;GM's were up 12.6%.GM totally blew their numbers away.It's been a monster bad stock.My charitable trust owns it.It's been very low in relation to its sales.*
I went to the Ford F-150 plant,and that is a winner.They make a big margin on the F-150.*
I don't know golfer Phil Mickelson from Adam.FBI agents walked up to him at a tournament.Listen,when the FBI shows up like that,they're making a statement,a frightening statement.*
I like First Solar very much,but they've been eviscerated by Chinese dumping.We're in a bit of a war with China financially.*
One of the things that happens in a bull market is,a guy upgrades a stock and it goes higher.Every one of the health maintenance stocks is on fire.Wellpoint is higher,and I think it deserves to be.You have takeovers,you have analysts making big calls,and it's working.There was a lot of fear and a lot of pain about that stock.I think you'll see the analysts come out of their foxholes and their pillboxes.*
AT&T expects to save 1.6 billion dollars in content costs after year 3 of the DirectTV deal,a 20% cut,adds Cramer colleague David Faber.It is certainly front and center for many of these companies as they see the Comcast-Time Warner Cable and AT&T-DirectTV mergers come into effect.One day CBS and Viacom coul come back together,but I don't want to get too far ahead of myself.Disney is by itself.It's so much bigger than everybody else.They have so many different parts.They have the theme parks.*
Rite-Aid is back.It's no longer a turnaround;it's an earnings per share story.I buy my beer at Rite-Aid.I'm not kidding.When you go into your drugstore,they don't look like they used to,CNBC Wall Street expert Jim Cramer pointed out.*
AT&T(T),Rite Aid Corporation(RAD),Ford Motor Company(F),Dollar General(DG),General Motors(GM),Walt Disney(DIS)

Cleanliness From Sweden:Molnycke Health Care Profile

Molnycke Health Care AB is a Swedish firm that makes wound care and infection prevention supplies,as well as operating room products.Based in Gothenburg,it has about 7,000 workers.The company has sales offices in 30 countries,as well as factories and distribution centers in 9 countries globally.It is expanding from its big European presence into North America and the Asia-Pacific Region.
One of Molnycke's most popular products is its anti-bacterial skin cleanser Hibiclens.It is used by patients and OR staff as a pre-surgical wash.The product is also useful for infection prevention at home.It is effective against dangerous staphylococcus bacteria found on the skin.Hibiclens is available at CVS and Rite Aid pharmacies in the U.S. in 15-packs.
Molnycke Health Care is privately held.
CVS Caremark(CVS),Rite Aid Corporation(RAD)

Pharma Focus

A severe influenza outbreak is sweeping across the U.S..What is worse,the strain of flu that is prevalent was not selected for this year's vaccine.This points to a better first quarter for pharmacy chains such as Rite Aid Corporation(RAD),which is led by CEO Mary Sammons and based in Camp Hill,Pennsylvania.Its stock has been trading for less than 3.00 U.S. a share recently.Earnings for Q4 2007 were low on account of warm autumn weather,which kept colds to a minimum,and cautious consumers.Typically,pharmacy chains need illness to drive substantial traffic into their stores.When patients or their families come in to pick up medicine,they buy other kinds of merchandise as well.Rite Aid,for example,carries many cosmetics and has a digital photography center.You can even get photo restoration for 29.99 with a coupon this week.Small electronics such as cell phones,MP3 players and blood pressure monitors are also offered.Rite Aid is striving to be first with new over-the-counter medicines.The hot item now is the allergy drug Zyrtec(cetirizine),which Rite Aid is selling in both branded and private label forms.While the branded form sells for 18.99,the private label goes for 7.99.Soon private label Prilosec(omeprazole) will be sold as well.While Rite Aid shares have been doing poorly,those of biotech drugmaker Genentech(DNA) have been appreciating lately,on news that clinical trial data show that its Avastin is effective in treating advanced breast cancer.The San Francisco Bay Area firm is seeking Food and Drug Administration approval for that usage.It is also testing Avastin in over a hundred additional trials for different applications.As a health care company,Genentech is seen as a defensive holding.Its powerful drugs will be needed regardless of recessionary conditions.In this morning's trading,shares of Rite Aid were up at 2.59,and Genentech shares were up at 73.05.

Rite Aid Scores First

Rite Aid Corporation(RAD) is the first pharmacy chain to sell a DNA test.Rite Aid stores in California,Oregon and Washington are selling a DNA paternity test kit.The kit sells for about 20.00,and the lab results,which are obtained by mail,are about 120.00.The Camp Hill ,Pennsylvania firm is in the midst of its busy Christmas selling season.Rite Aid sells a complete line of Christmas decorations,bargain gifts and candy.A good assortment of gift cards is also available.The Rite Aid gift card is blank.The customer specifies the amount at the register.As well,you get a free 5.00 Rite Aid gift card with any purchase of 49.99 or more at 1-800-Flowers.com.You also get one with your first order of 50.00 or more at PetCareRx.The Single Check Rebate program gives Rite Aid shoppers 5.00 back for each 25-50 spent;10.00 for each 51-100;and 20.00 back for over 100 spent.Shopping at this dynamic store,you are almost sure to leave with more than you expected.The service sector,to which Rite Aid belongs,was recently charted by the Institute for Supply Management,a buyers' trade group in Tempe,Arizona.In November,the service sector fell to 54.1,from 55.8 in October.Readings above 50 indicate expansion.New orders plummeted to 51.1 from 55.7.The survey of purchasing managers noted a decline in employment and an increase in fuel prices.The manufacturing sector declined slightly,from 50.9 in October to 50.8 in November.This was slightly stronger than the 50.1 expected by analysts polled by Thomson/IFR Markets.There were gains in new orders and production,while employment declined.The gains were attributed to more export activity,on acccount of the weak dollar.The ISM surveys are important indicators to the Federal Reserve.Shares of Rite Aid were up this morning,at 4.10.Rite Aid reports earnings on Thursday,and rival Walgreens(WAG) reports on Friday.CEO of Rite Aid is Mary Sammons,who has been interviewed by CNBC's Jim Cramer.

Biotech Drug May Halt Brain Tumors

A small drug trial conducted by Duke University indicates that Avastin,now approved for the treatment of lung,breast and colon cancer,may lengthen the lives of some brain cancer patients.Avastin works by blocking the nutrients and oxygen which sustain malignant tumors.Eighty percent of the 35 patients in the trial experienced a doubling of expected survival to at least six months,while 50% of them had a halting of new tumor growth.In at least one case,complete remission occurred.Typically,patients with the type of cancer,glioblastoma,live only three months with conventional chemotherapy.The combination of Avastin with another drug,irinotecan,must be further evaluated in a larger trial to get approval.If it does,more insurance companies will cover the treatment.Avastin is produced by Genentech,a San Francisco Bay area biotech firm.The drug is extremely expensive,running into six figures for a full course of treatment.Genentech(DNA) sometimes provides free drugs or caps treatment costs.The company's stock has been battered by Wall Street analysts,who obsessively track the career of every medication.The slightest setback for one drug reinforces the stock's range-bound status.Ultimately,this can mean fewer dollars supporting the firm's critical research,as investors are scared away.Nonetheless,many analysts consider Genentech a good long-term investment.It has a long list of drugs and prospects in various stages of development and approval.Another company with a battered stock,Rite Aid Corporation(RAD),has been living up to its name.The Camp Hill,Pennsylvania pharmacy chain provided free sunscreen,lip balm and hand sanitizers to victims of the Southern California wildfires.It also donated 100,000 dollars to the American Red Cross for the victims.Along with other retailers,Rite Aid has heavily promoted a wide range of Halloween merchandise this year,while inserting a number of Christmas items in this week's circular as well.Rite Aid,which is led by CEO Mary Sammons,is dealing with its recent acquisition of Eckerd and Brooks drugstores.

Rite Aid Celebrates

Rite Aid Corporation(RAD)is celebrating its 45th anniversary this week.To mark the occasion,the pharmacy chain is having a big sale.Rite Aid is even giving three name brand products away,through its Single Check Rebate program.Halloween candy is on sale,along with raisins and chicken noodle soup.There is also a rebate on Dunkin' Donuts coffee.Besides the relationship with Dunkin' Donuts,Rite Aid has ties to GNC(General Nutrition Center).Many Rite Aid stores have a GNC Location within them.Seniors are prime pharmacy customers,and Rite Aid caters to them with its Living More program.Registration in the program entitles seniors to 10% discounts on health-related items.A Rite Aid I recently visited is a free-standing store.It has a pharmacy drive-up window and plenty of parking.In spite of all the merchandise,the interior isn't junky.The store is bright,neat and well-organized.Health care is unmistakably what it's about.Rite Aid continues to absorb the Eckerd and Brooks stores it recently acquired.The branding process will be complete within sixteen months,resulting in a chain of 5,000 stores in 31 states.Mary Sammons is CEO of the expanding business.

Rite Aid On Right Track

Rite Aid Corporation(RAD) has closed on its acquisition of 1854 Eckerd and Brooks drugstores in 18 states,as well as 6 distribution centers.The pharmacy chain,based in Camp Hill,Pennsylvania,plans to open 1,000 new stores as well.Led by CEO Mary Sammons,whose photograph is sometimes featured in Rite Aid circulars,the firm's marketing is characterized by a rebate program,as well as "buy one get one free" promotions.Rite Aid's logo is a red,white and blue shield that is more striking than the logos of rivals CVS and Walgreens.Rite Aid is the third largest drugstore chain behind Walgreens and CVS.