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Here are the stocks I mentioned on "Squawk Box" Wednesday morning on
1. Dow Chemical
: I've written about this one quite a bit recently. It reports earnings Thursday, and while the second quarter probably was weak, pricing and inventories have improved in the ethylene chain, and that matters.
2. Teva Pharmaceutical Industries
: I believe the proposed acquisition of
makes a great deal of sense. Teva is not overpaying, and the upside can be substantial. Note that Ivax could be a huge beneficiary in the Lexapro patent dispute with
. That's a long shot, but Teva effectively gets a call option with the Ivax purchase. Look for a big year in 2006 for Teva and the rest of the generic-drug manufacturers.
3. Gilead Sciences
: This company continues to beat forecasts based on the strength of its HIV franchise. Lots of upside is still left in terms of expanding its market share, and Gilead generates gobs of free cash flow. The main criticism of Gilead is its rather weak pipeline. That's a bit unfair, I believe, but the company's strong cash flow will enable it to fix this problem via a product or company acquisition.
: Expect an increase in guidance for the combined companies when SYMC reports earnings Thursday. Note that nearly 20% of Symantec's market capitalization is represented by cash. And it is looking to buy back about 15% of the float.
: Like Symantec, the company is flush with cash. Ed Zander is the real deal, and although we are all accustomed to Motorola messing things up one way or another, I believe that this company can thrive under the new management team. The stars have aligned for Motorola, and given a relatively low valuation, I believe the stock has legs.
At the time of publication, Bagley was long Dow Chemical, Teva Pharmaceutical, Gilead Sciences, Symantec and Motorola, although holdings can change at any time.
Jeffrey Bagley, CFA, is a portfolio manager for McCabe Capital Managers, Ltd. Bagley received a master's of business administration in finance from Fordham University and a bachelor's of science in business economics from the State University of New York at Oneonta. Disclosed holdings may change at any time without notice. Under no circumstances does the information in this commentary represent a recommendation to buy or sell stocks. Bagley appreciates your feedback;
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