Baseball's "Grapefruit League," which allows for player auditions and tweaking of rosters, has been completed. From this point forward, they play for real fruit.
April statistics, such as won/loss records, home runs, RBIs, batting averages, ERAs and saves are often misleading. Because of the nature of how statistics are compiled, early season numbers lend themselves to dramatic fluctuations.
Therefore, until one accumulates a significant number of at-bats, innings pitched or save attempts, it is difficult to gauge the meaning of early season numbers. It is important to recognize that the numbers have an uncanny ability to even themselves out over the course of the regular 162-game season.
Moreover, certain teams and players have established a track record over time whereby their performance becomes relatively predictable. Unequivocally, it is a much easier and safer proposition to attempt to predict the long-term performance of teams and players in comparison to their day-to-day performance.
Therein lies the lesson and beauty of deep-in-the money calls; they allow us the opportunity to cash in on long-term performance rather than reacting to daily volatility. Furthermore, they provide us with protection so that we can limit the bleeding, unlike some teams and players that continue to spiral downward.
On opening day, all teams and players are in the money. Which teams will wind up staying in the money is anybody's guess. Deep-in-the-money calls allow us, at least to some degree, to safeguard our choices.
Speaking of safe, I have a team for you with an established track record, one in which we should all feel comfortable investing our hard-earned money:
. This company defines consistency and performance, what we all look for when putting our money to work. And what a time to buy the world's largest biotechnology company -- especially the way we buy, or invest.
On April 18, which is a week from Tuesday, Amgen will announce its earnings. The deep-in-the-money call I'm recommending is the July $60 (strike price) for $12. This price represents the last trade on Friday and was also the lowest trade to date in the July $60 calls.
Let me explain why this is such a beautiful thing. With Amgen announcing its earnings a week from tomorrow, we could see a couple of things happen. First, the stock could rally into earnings, meaning you could lock up a nice $2,000 to $5,000 profit in approximately one week. That's what I call a return on investment.
The second possible scenario is for the stock to continue trading around current levels until it announces on April 18. Then we will have to wait and see which direction the operators want to spin Amgen's earnings. If they take it down lower, no problem, we buy more. Remember, we are talking about the best biotech company in the world!
Check out these numbers: in 1992, Amgen surpassed $1 billion in sales. In 1996, its sales surpassed $2 billion. In 1999, the year after the Food and Drug Administration approved Enbrel, the blockbuster arthritis medicine, it had sales of over $3 billion.
For 2005, Amgen is expected to announce $12.43 billion in total sales. This is a team you want to be on; in fact, last Friday, I bought the same deep-in-the-money calls I am recommending to you, but I paid $12.90. I am in there buying with all of you, every week, remember that!
Can you say lock and load? There are so many great things to say about this wonderful company, besides the fact that it has over $5.2 billion in cash on hand and an astounding $1.82 billion in free cash flow -- Amgen saves lives.
Remember: Life is a journey, enjoy the ride!
At the time of publication, Dykstra was long Amgen calls, although holdings can change at any time.
Nicknamed "Nails" for his tough style of play during his Major League Baseball career, Lenny Dykstra was an integral member of the powerful Mets of the mid-1980s, including the world champion 1986 squad, and the Phillies in the early 1990s.
Today, Dykstra manages his own stock portfolio and serves as president of several of his privately held companies, including car washes; a partnership with Castrol in "Team Dykstra" Quick Lube Centers; a state-of-the-art ConocoPhillips fueling facility; a real estate development company; and a new venture to develop several "I Sold It on eBay" stores throughout high-demographic areas of Southern California.