“Microsoft of Biotech”

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Many of you saw this email last week, the latest in a long string of Mark Skousen’s attempts to predict breakout stock performance on earnings dates. His past history of this is spotty, and I’ve written a few times about earnings pops he has predicted — some good, some bad.

Alas, I didn’t get a chance to look into this particular one until it was too late — I read the email on Friday, which was the day after this “Microsoft of Biotech” released earnings and was expected to stun the world.

And wouldn’t you know it, the one I miss is the one that actually does perform more or less as Skousen predicted …

This “Microsoft of Biotech,” according to Skousen, is China Medical (CMED) — more of a medical device maker than a traditional biotech drug firm, but a long-time Skousen favorite, and one of the few stocks I’m aware of that he has really stuck by over the last couple years. I last wrote about them over a year ago when Skousen was touting them, that time in the mid-$20s.

I’m assuming that he means the Microsoft of 1992, by the way, not the Microsoft of 2002 that has been more or less dead money for six years.

It has been a bouncy year or so for CMED, though on balance a good one (unless you bought in January or February) — they dropped by about $20 on their last earnings announcement, so it took some guts to promote them before this one … the shares spiked as high as $57 or so back in the early part of the year, but fell on the last earnings and generally petered out thanks to indifference about China and growth stocks. Then came the better-than-expected earnings release on Thursday, and the shares boomed back up. Still only about $41, well off the highs, but a nice performance nonetheless.

I wouldn’t necessarily use this evidence of success to suggest that Skousen is going to be any better than 50/50 odds when predicting an earnings blowout, but he has at least been backing this company consistently during a very good year or two of stock market performance. So, credit where it’s due.

CMED is essentially a diagnostics and cancer-fighting medical device company, much of Skousen’s favor came because they treat cancer using targeted ultrasound therapy and seemed to have some success there, and they also provide some other medical devices. They trade at a much lower valuation than the more well-known big medical device maker from China, Mindray Medical (MR), probably largely because Mindray has a broader array of devices that are essentially competitive copies of standard medical machines used worldwide, and doesn’t have to rely on one therapy, the way CMED apparently does with ultrasound, to grow (MR is about 4X the size of CMED, and trades at about twice the PE valuation).

So … CMED is a nice company, it’s not expensive on current earnings, and compared to its peers it’s even cheap on trailing earnings … and the earnings report this week indicated that 2009 looks good for them, too. I’m in no position to verify the success of their machines, but they may have promise — I know a few Gumshoe readers have bought this one in the past, feel free to share if you’ve got an opinion.

And those of you who haven't retired yet, check this out as we get to the "planning and forecasting" part of the year...

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22 Responses to “Microsoft of Biotech”


  1. I GUESS THIS IS ANOTHER PUMP AND DUMP BECAUSE THEY HELD ON TOO LONG ALSO. NOW THEY ARE TRYING TO RECOUP THEIR LOSSES AT THE EXPENSE OF NEW AND UNEDUCATED INVESTORS. I THINK THIS PRACTICE SHOULD BE ABLE TO BE LITIGATED IN COURT, INSTEAD THE GOVT. GAVE THESE LIARS A LICENSE TO STEAL. THE DISCLAIMER. BS. IT IS OUT AND OUT WRONG INFO. IT IS WRONG PERIOD, AND DECEITFUL. CAUSES MANY PEOPLE TO LOSE MONEY AND THEY KNOW WHEN THEY TAUGHT THESE STOCKS THEY WILL GO DOWN IN VALUE VERY SOON AFTER THE PURCHASE. WE NEED TO DEMAND THE DISCLAIMERS INCLUDE THE TAUGHTERS OWN THE STOCK. THEY SHOULD ALSO TELL IF THEIR TRADE HAS BEEN PROFITABLE. DON’T LET THE INDUSTRY KEEP STEALING OUR MONEY. IT IS SUPPOSED TO PROTECT US. IT DON’T.

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  2. These comments are just plain ugly and a rant. I like to read comments that have some substance to them, not this stuff…This commentary doesn’t have the usual level of civility we have all become accustomed to–

    As for Skousen’s recommendation, don’t worry, it will go down again, and then, anyone who wants to hold it can buy it on the dip. Personally, I think of this stock as a short play, not a keeper. Any company that relies on just one technology makes me think they will ultimately sink when a newer, cheaper, or better technology comes along.

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  3. Investorgirl so what else is new?
    the word TOUT was used very early to describe people who would tell you, for a fee, which horse would win money in a horse race.
    Was the advise good or a waste of money?
    Did the TOUT really guarentee that the selected horse would win or just that that was the pick of the day.
    CAVEAT EMTOR, QUI IGNORARE, NON DEBUIT QUOD JUS ALIENUM EMIT.
    Let the buyer beware, who ought not to be ignorant of what he is buying, when buying the rights of another.
    CAVEAT VENDITOR did exist strongly in old Roman Law and to a limited extent in English and American Law for defects or deficiencies of the sellers goods, but beyond those limits the laws now are reluctant to go.
    The best rule is your own, CAVERE, exercise caution and take care.

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  4. I have not followed Skousen’s picks but have held CMED for awhile. It does bounce a bit, but the real winner for this stock will come if and when the “HIFU” focused ultrasound cancer treatment gains wider acceptance. Based on substantial success with the Chinese populace and increasing good news in trials, those approvals should come in the next year or so. Once this hits the US or Euro markets, this will become a huge success. The diagnostics arm was supposed to add a recuring income stream and has been more suceesful than I expected. They do tend to hit their growth targets and should be valued closer to $50 based on their growth rate. I consider this a long term core holding at this point. I do enjoy it when the guru’s tout holdings I am already in.

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  5. in apparal wurl we wud have taughters n suns n douters and all stocks would wryse. spesly kows who wud give us moonshots per the taughters n knot the kow drops (bs) we r hear n mired. dont take n ewudden knickles or usa 70pursent dullers. so sayeth pennyante.

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  6. http://finance.yahoo.com/q/ta?s=CMED&t=1y&l=on&z=m&q=l&p=m200,m50&a=&c=

    Mark was stopped out of CMED, but re-entered the position soon afterwards this year.

    This stock & that Aluminum stock are his two Chinese faves, & both have been successful for him. He also was stopped out of ACH late last year, I’m no longer a subscriber, so he may not have re-enterred that long trade. http://finance.yahoo.com/q/ta?s=ACH

    Mark is too spread out IMHO, he has his hedge fund, his varied speaking engagements worldwide & is still involved at Investment U., the Oxford Club folks.

    One great piece of his advice that I swear by is; “Never allow a big gain to become a small gain or loss, NEVER!”

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  7. And here’s another one. One thing I like so much about Gumshoe’s comment section is that so many of his readers provide interesting and valuable information on the topic at hand. Ignore a comment you don’t care for, and stay on topic, please.

    Congratulations, Dean, on being ahead of the game, and I will be watching CMED for that $50 target.

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  8. Since we are talking about touting stocks, here is some straight from the horses mouth LEGAL insider information with no strings attached.

    My son is operations manager for Globalstar, a satellite based phone service that is off the radar as far as Wall St, goes, and He is responsible for ALL their uplink sites worldwide. He spent several months in Taiwan supervising the building of a network there, has been to Brazil, Nicaragua, France, Germany, and many other nations to hire local managers etc.

    The Co was bought out of bankruptcy by a very wealthy entreprenuer to whom my son reports directly. The reincarnation of the Co. IPO’d at $17, and drifted down to around the $10. mark and my son has bought and sold shares for his own account based on his knowledge of the Co. He keeps me appraised of his views and recently Globalstar appeared on s list of NEW LOWS in stock prices so I asked him about it. His response was that the market has punished the stock (currently around $3.) because of misunderstanding the details and reasons for a recent financing and it is WAY OVERSOLD!

    While it is not the type of stock that will necessarily have a quick bounce, he believes that it is a stock with great long term potential and apparently the COO and major shareholder feels the same way because he just bought an additional MILLION dollars worth of stock!

    Good enough for me, I bought my shares recently at $3.20 and plan on holding them for years, do your own due diligence! Myron

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  9. The good doctor S. got me into CMED May 2006 with one of his teasers, and by god, I did very well with that particular stock and will get back in, selling some calls etc.
    Too bad that a good part of my CMED profits had to cover some bad Dr. S. stuff, one of them Quest Capital (so far and a couple of years old)that I believe was discussed by the Gumshoe not too long ago.

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  10. Well, this particular batch of rants was good for a laugh… especially the “Snipers” comment.

    I just wish that folks would not SHOUT… that is so basic.

    I don’t like one note stocks, but there were some good comments… pump and dump is pretty common.

    It isn’t really the stock market anymore, this is more like Vegas and you know the house almost always wins…

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  11. “Thank you” to each of you who kept your post
    on the subject of stocks and investing.

    David

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  12. Jerry…..You’ve got alot of nerve telling someone what to do or not to do with THEIR MONEY…..and “investor girl”…you are absolutely correct…But I don’t think that THIS is the forum to express those feelings……..Gumshoe, You perform a service like no other….KUDOS !

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  13. As we are talking China stocks I want to bring up another one here I have been hearing about; China Capital International (BJCHF.PK) the operator of the new Bejing Airport I beleve. It´s a favorite pick of the stockpicking master in Canada, Mr. McDuff. Any opinions on this one ?

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  14. Asian Growth Stocks just sent urgent update on CMED saying sell as supposedly company has loads of cash but missed an interest payment on their convertible notes and S&P downgraded those notes to default status. Tycangco said company not answering phones now and is a sell. I had been looking at CMED for some time but of course glad I passed on it. Very unsure of Chinese accounting practices, but I suppose western ones rot also. Subscribed to AGS last summer because of special $10 a year offer. Bothers me that portfolio has not been updated since Thanksgiving but even then he sure had plenty of big losers. Now touting a Chinese penny gold that may go to the moon and will tell you if you renew at a much higher rate of course. So I’m trying to find the chinese gold with a $220 million market cap just for fun. Why is it that various newsletters you already paid for insist on holding out on what they are looking at now? Or have opinions on the market that are both bullish and bearish. Mr Gumshoe though does a bang up job.

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  15. IS INVESTORGIRL 10 YEARS OLD? HER SPELLING AND COMMAND OF THE ENGLISH LANGUAGE IS HORRIBLE. TAUGHTERS??? IF SHE KNEW HOW TO SPELL TOUT, SHE PROBABLY WOULDN’T HAVE MANUFACTURED THIS “WORD”.

    WITH THIS LIMITED EDUCATION SHE SHOULDN’T BE BUYING AND SELLING STOCKS.

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  16. Hey Jerry,
    What makes you an authority on spelling? Get a life and grow up.
    Political speech writers can spin the best words for politicians who say nothing.

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  17. Well am still a subscriber to Mark S. So, yes he’s backing the CMED again. I agree, His picks are more for traders. Doing some of your own research too, can help in deciding what your comfortable holding. Good Investing!

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