In the week ahead, we will gain increased insight into the true impact the subprime crisis had on our financial institutions. No one has too clear a picture as to the full effect of the crisis, and as a result, today I would like to stay away from the financial sector. Last week I shifted our focus to the health care sector in writing about Wyeth (WYE) .
Today I believe there is a similar opportunity with
. I last wrote about
Forest on Aug. 31, shortly after management announced an increased share-buyback program. To me, the buyback program clearly indicates that the stock should be trading at higher levels. Furthermore, it shows management's confidence in the company's present arsenal of products, in addition to optimism about its ability to bring new drugs to market.
To that end, Forest expects to hear shortly about a new drug application for Azor and Nebivolol, both blood-pressure drugs. These drugs bring access to a huge area of need in the health care sector and could bring new revenue streams. Forest claims most of its revenue through the sale of its highly successful antidepressant, Lexapro.
Speaking of revenue, the last time Forest reported, the company came in with $3.45 billion. The New York-based company has a stellar balance sheet. Besides $1.53 billion in cash, it reported free cash flow that was just shy of a billion, at $889 million dollars. To finish it off, the company owes nothing to anybody; zero debt.
A recent patent dispute over Lexapro was settled in favor of Forest and should help secure the drug's profitability for the company until its patent expires in 2012. By that time, expect Forest's heavy investment in research and development to handsomely reward the company's shareholders. To take part, I will place a limit order for 10 May 25 calls (FRXEE) at $14.60 or better.
Game of Life
In the ALCS, Josh Beckett continued his postseason excellence, as the Red Sox pummeled C.C. Sabathia and the Indians in game one. The Indians evened the series at 1-1, with a win in game two, as Trot Nixon, a former Red Sox stalwart, got the big hit to secure an extra-inning victory. The series shifts to Cleveland for the next three games, with game three tonight.
Meanwhile, in the NLCS, the amazing Colorado Rockies are poised to sweep the Arizona Diamondbacks tonight, just as they did the Phillies in the NL Divisional Series. The Rockies, winners of 20 of their last 21 games, continue to get two-out, run-producing hits, and great defense, in addition to excellent pitching.
According to reports, the Yankees will hold meetings over the next few days to determine the future of Joe Torre. Although speculation remains that Torre is finished, some believe he will be given a one-year contract. In other managerial news, the Cincinnati Reds gave Dusty Baker a three-year contract to turn the Reds' fortunes around.
The architect of the Atlanta Braves' tremendous successes over the years, John Schuerholz, has stepped aside as general manager to become team president. Assistant GM Frank Wren will replace Schuerholz. Another Atlanta product, Leo Mazzone, who was the Braves pitching coach from 1990-2005, was fired from his position as the Orioles pitching coach, after two unproductive seasons.
In the NFL, the battle of the unbeaten took place in Texas Stadium, with the New England Patriots beating the Dallas Cowboys 48-27, in a game closer than the score indicates. Tom Brady threw five touchdown passes to become the first NFL player in history to throw three or more TD passes in the first six games of the year. The record holder for career TD passes, Brett Favre, and his Packers squeezed out a victory against the Redskins, to run their record to 5-1.
Vinny Testaverade was signed by the Carolina Panthers last week as an insurance policy for David Carr, who was to take over for Jake Delhomme, after he had season ending elbow surgery. Lo and behold, Carr was unable to play because of his own injury, so Testaverde, at age 43, became the oldest quarterback in NFL history to start and win a game as the Panthers beat the Cardinals.
In college football, the BCS rankings were forcibly rearranged as No. 1 LSU lost to Kentucky and No. 2 California lost to Oregon State. Ohio State is the new No. 1, with the University of South Florida No. 2 and Boston College No. 3.
Midnight Madness, heralding the official start of NCAA basketball, took place over the weekend on college campuses across the land. Enthusiastic hoopsters and their rabid followers celebrated the yearly ritual, whereby the student body watches their team practice in the wee hours of the morning.
The Players Club recognizes and appreciates the excitement and exuberance that accompanies college athletics. Moreover, the majority of professional careers are developed and honed on college gridirons, hardwoods, rinks and diamonds. By guaranteeing recurring cash flow, through our strategic partner, The Players Club endeavors to ensure that the lessons learned both on and off the collegiate playing fields, translate into comfortable and satisfying lives.
Always remember: Life is a journey; enjoy the ride!
At the time of publication, Dykstra had no positions in stocks mentioned.
Nicknamed 'Nails' for his tough style of play, Lenny is a former Major League Baseball player for the 1986 World Champions, New York Mets and the 1993 National League Champions, Philadelphia Phillies. A three time All-Star as a ballplayer, Lenny now serves as president for several privately held businesses in Southern California. He is the founder of The Players Club; it has been his desire to give back to the sport that gave him early successes in life by teaching athletes how to invest and protect their incomes. He currently manages his own portfolio and writes an investment strategy column for TheStreet.com, and is featured regularly on CNBC and other cable news shows. Lenny was selected as OverTime Magazine's 2006-2007 "Entrepreneur of the Year."