Celgene Corporation (NASDAQ:CELG) is not your typical biotech stock.
While the stock market has been choppy for the last few months and many risk-on plays in biotechnology have seen plenty of volatility, CELG stock has been marching steadily higher since 2013 without many bumps along the way.
Consider while other large-scale drug companies like Amgen, Inc. (NASDAQ:AMGN) and Novartis AG (ADR) (NYSE:NVS) are up about 30% in the last year, Celgene is up twice that with roughly 67% gains in 12 months’ time.
The past several weeks have gotten a little choppy for CELG, of course.
But this $100 billion healthcare stock is a screaming buy as it looks to break out after weeks of healthy consolidation — and investors looking to buy Celgene stock should see this as the perfect moment.
Why CELG Stock Is a Buy
The fundamentals of Celgene are simply great right now. A look at the last few years shows significant growth in both the top and bottom lines, with GAAP earnings soaring 40% last year from $1.68 per share to $2.39 — and forecasts for that figure to roughly double by the end of 2015! And unlike other fast-growing stocks, CELG is showing an acceleration in profits that is handily above its revenue growth, proving the profit potential is real.
While there admittedly is plenty of volatility for development-stage biotechs, Celgene stock is not in the same crowd as cash-burning small caps, with a soundly profitable operation that throws off well more than $2 billion in operating cash flow each year and boasts more than $7.5 billion in the bank.
On top of strong numbers, technical analyst Kevin Marder recently noted a “base-building” in Celgene across eight weeks that has provided a strong foundation for CELG stock charts going forward. Moreover, InvestorPlace Chief Technical Analyst Sam Collins pointed out this morning that CELG is flashing an MACD buy signal, and that the stock has strong momentum.
To top it off, all this momentum doesn’t come at an outrageous premium, with the forward price-to-earnings ratio of CELG stock at just 19.8 — in line with the Nasdaq-100 and only slightly higher than the 17.5 earnings multiple of the S&P 500.
A great balance sheet, impressive sales and profit growth and a chart that looks good? Yes, please!
On top of the specifics, it’s also important to remember that companies like Celgene are in the right place in the right time as aging baby boomers demand more care and emerging markets continue to spend more and more on modern medicine as their standard of living rises.
Bottom Line
I wouldn’t necessarily call CELG stock “perfect,” but it’s pretty darn close. The stock is a bit riskier than conventional blue chips in the $100 billion arena, but Celgene also has proved it can deliver much bigger rewards than the typical megacap.
It might be worth your while to dive in as CELG starts to break out of its latest period of consolidation.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not hold a position in any of the aforementioned securities.
