Amgen Just What the Doctor Ordered

A Healthy, Growing Healthcare Pick

December 29, 2008

Amgen (AMGN) is one of the largest biotechnology companies in the world. With its well-established pipeline of drugs, Amgen helps patients fight cancer, kidney disease and arthritis.

The company’s most profitable medications—Epogen and Aranesp—treat anemia and account for more than one-third of its sales. Amgen’s leading arthritis drug, Enbrel, is one of the best-selling treatments in this multibillion-dollar market.

One of the reasons I recommend this stock is because Amgen has a lot of drugs in different trial phases and a proven track record for getting drugs approved and into the hands of consumers that rely on these medications to stay healthy and productive.

For instance, the company recently announced that it expects to have three more drugs on the market over the next five years that are projected to net $1 billion or more in annual sales each. Now that's the prescription for continued profits!

The vital signs of this company are further proof that it will succeed in 2009. The company affirmed its earnings outlook for 2008, and in the third quarter, Amgen's earnings rose a stunning 505.6% to $1.09 per share compared with 18 cents per share in the same quarter a year ago!  The analyst community was expecting third-quarter operating earnings of $1.08 on sales of $3.7 billion, so the stock posted a 13.9% earnings surprise and a 4.9% sales surprise. Those numbers prove AMGN is a tremendous buy.

It’s also worth noting that the company’s marketing strength and ability to commercialize biotechnology therapeutics have facilitated Amgen’s venture into European markets. Amgen’s established network also makes it an ideal development partner for smaller biotech companies.

PortfolioGrader, my free stock ranking tool, rates Amgen as an A-stock. If you’re looking for a low-risk way to diversify your portfolio, this stock is a great place to start!