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Dykstra's DITM Call: Forest Labs

Lenny Dykstra

I had something to celebrate as well. Monday's pick, Dow Chemical(DOW Quote - Cramer on DOW - Stock Picks) turned in a win, as it reached the stop price, $1 above entry. As a reminder, whenever I enter a position, I immediately place a good-till-cancel order to sell $1 higher. .

As for those good quarterly figures, Intel(INTC Quote - Cramer on INTC - Stock Picks) and Coca-Cola(KO Quote - Cramer on KO - Stock Picks) both crossed the plate with solid numbers earlier in the day and IBM(IBM Quote - Cramer on IBM - Stock Picks) wrapped up with a surprisingly strong report after the closing bell. JPMorgan(JPM Quote - Cramer on JPM - Stock Picks), who took a big dip from the same quarter last year, even beat the Street's expectations.

Online auctioneer eBay(EBAY Quote - Cramer on EBAY - Stock Picks) also got in the mix, reporting better-than-anticipated first-quarter profits. Analysts were looking for earnings of 39 cents a share on revenue, before one-time charges, but the company reported profits of 42 cents a share for the period.

However, the news was not all good. Its growth in users was sluggish in the period, gaining only 1% and falling short of the 5% uptick the Street had been expecting.

All in, the major indices benefited from these reports that gave investors something to feel good about. The Dow skyrocketed more than 256 points, or 2.08%, while the S&P climbed 2.27% and the Nasdaq added 2.8%.

But I'm still going bargain hunting, and today's pick is Forest Laboratories(FRX Quote - Cramer on FRX - Stock Picks).

The company develops, manufactures and sells both brand name and generic drugs and pharmaceutical products. Its two biggest drugs are anti-depressant Lexapro and Namenda, which is used to treat Alzheimer's and dementia.

Forest Labs' balance sheet is pristine with $1.7 billion in the bank and no debt. It has a number of phase III and phase II drug trials ending in the next year and half.

But most importantly, its stock has been severely smacked down this week following Tuesday's fiscal fourth-quarter report. Forest Labs significantly cut its 2009 earnings outlook and said it will beef up its research spending. The stock had been trading around $40 a share before the news hit.

It closed yesterday at $36.52, but traded as low as $35.27, which is just a hair above its 52-week low of $34.89, so the stock is clearly well off its 52-week high of $56.65. That's why I will place an order to buy 10 November 30 (FRXKG) calls for $7.50, or better.

Don't forget to play by the rules. I set my exit price with a GTC (good till cancel) $1.00 above the entry price to take a $1,000 profit on each win.

Always Remember: Life is a journey, enjoy the ride!