Why Finance? A Drug Company to Consider

I am a retired minister. That should scare you. Most ministers are not thought of as financial minds. As a matter of fact, I was turned down one time by a prominent Oklahoma Oil Company for a company credit card on the basis that I was the pastor of a church. They did not say that but my cousin worked at the corporate office and when I asked why I was rejected she informed me that ministers do not have a very good reputation in the financial community. That was new to me a young guy, pastor of his first church, in a rural community with only one gas station. I just paid cash at Frank's store and Kerr McGee. Oh, I was not going to say the name but it does not matter because they are no longer in business. Poetic justice. I did not get over it.

This new blog is entitled:

τοποθέτηση χρημάτων 

Financial Investment in greek. 

The greek is to prove I do have a theological education (a doctor's degree) but this blog is not about theology. It is about making money in the stock market. I started to call the blog Dr. Deep Pockets or Dr. Deal but I don't feel like an expert on this subject. How does that work for you? I just study hard and use strategies I have gleaned from observation, experience, research, and through a discipline I learned in my  investment club of almost 20 years. The SSG or Stock Selection Guide. 

Each post will recommend a stock I or we are studying and recommending with thoughts as to why we or I think it is worthy of your consideration. I am not a broker, the son of a broker and all of the small print lawyers write to assure that I will not get sued for your taking my advise apply to this post. This is not advise just information. Take it or leave it. If you make money then give me credit and share my post. If you lose money then go cry to someone else. Not really. You can go talk to your pastor about it. He only works  two days a week. Ha. Inside joke. 

So the first stock to consider:

http://www.lannett.com


Here is what they say about themselves.

"Founded in 1942, Lannett develops, manufactures and distributes generic prescription pharmaceutical products in tablet, capsule and oral liquid forms to customers throughout the United States. Lannett markets its products primarily to drug wholesalers, retail drug chains, distributors, and government agencies."

Positives about the company:

1. It sells generic drugs. That's cheaper. Attractive product.
2. Baby boomers are aging. That's me. More demand.
3. Although it is a small capitalization company (one under 1 Billion in annual sales) it has grown sales in the last five years at a rate of 48% and earnings at a rate of 46%. These two aspects of a company growing at about the same rate is a great sign.
4. This company meets all of the criteria on the SSG stock selection guide for the Better Investing Community. It leads the industry in pre-tax profit on sales and earnings on stockholders equity. It is also in the BUY zone with a 4.6 to 1 upside down ratio. At $32.38 it is in the middle of the buy zone that is between $15.60 and $39.20.

Negatives about the company or economy:

1. The current political climate is not good for pharma stocks. Uncertainty in the election cycle where both candidates are questionable on how health care will go under their administration.
2. They are still absorbing the recent buyout of Silarx Pharma and some questions remain as to how that will settle out.
3. It has lots of current debt that spiked in 2015 to make acquisitions.


For this blog we will buy 100 shares today at the market price of $32.38 and will see how it does over the next 12 months compared to the other companies we will study. Follow along to see how this works.

So we currently own 100 (a round lot) of shares of LCI @ $32.38 or $3,238.00 - $7 transaction cost or a value of $3,231.00 with a cost basis of $3,238.00 so we have already lost money. Ha! That's investing.