Trade of the Day: Celgene (CELG) Stock is a Stellar Buy at $100

Celgene Corporation (CELG) — On Oct.15, I began coverage of a group of stocks I considered to be some of the most undervalued companies for both traders and long-term investors. Celgene was first on my list, trading at $84.67, due to its outstanding management and product development.

The biopharmaceutical company develops small-molecule drugs for the treatment of blood-borne and solid-tumor cancers and immune-inflammatory related diseases.

On Oct. 23, S&P Capital IQ reiterated its “strong buy” rating and raised its 2014 earnings per share (EPS) estimate by $0.05 to $3.69, up from $2.98 in 2013. Its analysts estimate 2015 earnings of $4.36 per share. They also raised their 12-month price target by $18 to $122.

I, too, reiterate my “buy” on CELG stock; however, I would not attempt to chase it at the current price. Shares have jumped more than 25% since my last review, and there is a strong possibility of a better buying opportunity on a pullback.

When the stock reversed up from its 200-day moving average at about $83 in just six sessions in mid-October, it also pierced its 50-day moving average at $95 and resistance at $96. But on Friday, it barely advanced, up just 0.1%, while the Dow Jones Industrial Average had another strong triple-digit gain. MACD is now very overbought, and the price action is extended.

I believe traders will get the chance to buy CELG stock under $100. My trading target is $115 to $120, and my longer-term objective is a run to over $125.

CELG Stock Chart
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