On June 28, I wrote about Varian Medical Systems ( VAR - Get Report), citing its opening of a new hub in Switzerland as a remarkable opportunity for the company and implementing a deep-in-the-money call trade. Varian quickly scored a win, and the stock appears poised to repeat its success.

My selection of Varian draws on two themes covered this week: the profitability of increasing foreign revenue in light of a weak American dollar, as well as the continued surge in health care spending generally.

Varian makes equipment for the treatment of cancer, in addition to X-ray equipment. With a new hub right in the center of Europe, Varian has increased access and a firmer presence in the very lucrative and rapidly expanding European health care market. It's important for investors to realize that with the dollar continuing to lose value, company revenue earned abroad reflects increasingly favorably on revenue back home.

Furthermore, in the U.S., the health care sector as a whole has been an outstanding source of growth for the domestic economy over the past 10 years. Regardless of which way the broader economy moves, Americans place a high priority on receiving top-quality health care. This year, Varian has placed great emphasis on improving its technology as well as expanding its presence abroad.

Established, top-notch technology in the health-care fields attracts investors for all the right reasons. People are well aware of the need for cutting-edge medical treatment, especially when it comes to cancer. When it comes to a serious medical problem, Americans spare few expenses in order to bring about the healthiest solutions to their problems.

After reporting disappointing earnings and indicating that fiscal year 2007 earnings will come in at the bottom range of forecasts, Varian's stock subsequently took a big hit. Now that the stock has found its bottom and restarted its upward movement, it has once again become an opportune DITM play.

As a result, I will place a limit order to buy 10 November $35 (VARKG) DITM calls for $6.50 or better.

Now, let's take our weekly review of the Stat Book.


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."