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When you actively trade stocks, you want to have an "edge" that gives you extra confidence in your ideas. For many self-directed investors, this involves combining pieces of vital information into a composite picture of the stock.
One of the most common, big-picture combinations is what I call "techno-fundamental," where a buying rationale is established based both on company business attributes and the stock's price chart. And the more reasons from both the fundamental and the technical camps the better.
Stable pharma company with large device/diagnostic business
11x forward P/E with 3.5% dividend yield
Announces split into 2 companies to unlock value: R&D pharma and medical products
Medical products division, which includes generics, devices, diagnostics, and nutritional segments will generate 40% of sales from high-growth emerging markets
ABT was already on my watch list to buy on dips to $45-47 for the past year simply to trade the range on a solid, sleepy blue-chip between $46 and $53
Price break-out above $54 to 18-month highs on company split news
Price action above $54 since news very positive (not just a reaction, confirms Wall Street is positive on company move to unlock value)
These factors may not be enough to make you rush out and buy Abbott now, but at least one big pharma name might have a place in your portfolio.
And here are some other "techno-fundamental" profiles I've done recently that proved very profitable, with names like Baidu (BIDU - Snapshot Report), Onyx Pharmaceuticals (ONXX), Cummins (CMI - Analyst Report) and Lululemon Athletica (LULU - Snapshot Report) attracting strong buying interest in October...
Kevin Cook is a Senior Stock Strategist with Zacks.com
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