Two stocks stand out: one for being undervalued and having had relatively good performance over the last month and the other with the opposite characteristics.
On the long side, Actavis (ACT $98), the third largest generic drug maker in the world, looks attractive. Estimated earnings and growth from reinvestment are $8.50 and 22% vs implied earnings of $7.21 and 18.8%.
On the short side is Forest Labs (FRX $36). For March 2015, estimated earnings are $1.30, normalized earnings are $2.72 giving a growth rate of 9.7%. The implied equivalents are $4.63 and 17%.
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Robert L. Colby
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