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You probably knew those people in high school who never used to study, who really weren’t very smart, but somehow, some way they always seemed to get pretty good grades?
How did they do it? You know how. They would sit next to a smart person and copy their test. As far as the rest of the world was concerned, they were just as smart as the original!
Well this stuff still goes on…even after high school. You know when you go to the doctor and he prescribes you a name brand medicine that costs you $200/month? Well just after you get all pissed off and get all mad that you have to spend $200/month on medicine, the doctor tells you – Well you can always take the generic version which works just as well and you can get it for free. Huh? Not much of a choice there, is there.
So why not buy a stock in a company which makes these generic drugs which everyone is taking? Well, I just did. Today I bought Lannett Company, Inc LCI at 68.72. I will sell it in 4 to 6 weeks at 79.22.
Here’s why I like LCI:
Well, I really like the chart for starters:
The stock price has risen 104% in the last 52 weeks. That’s about 9% per month…pretty good return. Even better is the fact that the PE hovers right around 20. So it’s still pretty cheap, despite the phenomenal runup in price. Is this too good to be true?
Well, I’d like to think that the following two facts means that it isn’t. This company has a Return on Assets of 35%. It has a Return on Equity of 41%. It is simply a money machine. Lannett delivered revenue growth of 71% in its latest quarter. Earnings increased by 170%. That’s CRAZY money!
Lannett Company, Inc. develops, manufactures, packages, markets, and distributes generic versions of branded pharmaceutical products in the United States. It offers solid oral, extended release, topical, and oral solution finished dosage forms of drugs that address a range of therapeutic areas. The company provides its products for various medical indications comprising glaucoma, migraine, antibiotic, pain management, anesthetic, endometriosis, anxiety, irritable bowel syndrome, obesity, congestive heart failure, antipsychotic, tuberculosis, thyroid deficiency, dryness of the mouth, epilepsy, gout, low sodium, bronchospasms, hypertension, and gallstone, as well as HIV. It also manufactures active pharmaceutical ingredients. Lannett Company, Inc. markets its products under the Diamox, Fioricet, Fiorinal, Fiorinal w/ Codeine #3, Cleocin, Danocrine, Valium, Bentyl, Tenuate, Dospan, Lanoxin, Adoxa, Periostat, Prolixin, Dilaudid, Niazid, Levoxyl, Synthroid, Loxitane, Adipex-P, Fastin, Salagen, Mysoline, Benemid, Rifadin, Brethine, Dyazide, Actigall, and Retrovir brands. The company sells its pharmaceutical products to generic pharmaceutical distributors, drug wholesalers, chain drug retailers, private label distributors, mail-order pharmacies, other pharmaceutical manufacturers, managed care organizations, hospital buying groups, governmental entities, and health maintenance organizations. The company was founded in 1942 and is based in Philadelphia, Pennsylvania.
This company has been around for 70 years. They are doing things right, and have been doing it for a long time. I’m pretty sure that not much will change over the next few months while I am holding this stock. The long term growth rate projections for LCI continue to be in the high teens. Money Machine. Drinking machine! It’s based in Philly. Koch’s and Pat’s!
Typically, a pharmaceutical company that sells a patented drug receives special designation to hold all rights to reap the benefits of R&D for the original development of the drug for a set number of years after approval from the Food and Drug Administration (FDA). Once these patents expire, generic companies receive the authorization to develop same or similar products that often dilute the market share of the first developer. Significant amount of branded drugs are losing patent protection through 2017, which will drive short-term increases to the top-line. Aging population will act as a long-term growth driver. With all of their cash flow coming in, the company should have no problem expanding its product offerings, resulting in increases to revenues. Significant amount of branded drugs are losing patent protection through 2017.
Between 2008 and 2012, branded drugs with sales over $100b lost their patent protection. Between 2013 and 2017, most of these of branded drugs will lose their patent protection. As these branded drugs lose their patent protection, Lannett can begin manufacturing them more money…more money..more money. Also the Affordable Care Act is expected to extend health insurance to over 30 million more Americans over the next year, which will increase the number of patients in the country. What you have is more patients who each have more money to buy more drugs. The market for generic drugs is forecast to grow at a CAGR of 11% over the next four years. Every year we have more old people in this country. More old people equals more demand for drugs. We’ll have twice as many old people in 30 years as we have now.
In the past three years, LCI had 11 approvals from the FDA to manufacture new generic drugs. They have 60 more in development and under review. Do you have any idea what that will do to sales. More money… more money…. more money.
LCI management has indicated that they are looking to make an acquisition that "strengthens their tax position," and they have a couple partnerships with foreign firms. Also LCI is are one of a select few that are licensed to import and process poppy, which presents a huge advantage in their business. Poppy is a raw material in the drug production process.
Lannett has delivered record revenue figures for 9 consecutive quarters, as well as 12 consecutive quarters under which sales and adjusted earnings have exceeded year-ago results. It’s growing as fast as a tribble on the Enterprise.
ANAL-ysts expect 2015 earnings to come in at $3.96 per share, and 2016 earnings to drop to $3.76 per share. What kind of crack are they smoking? This company has no debt on the balance sheet and all it does it grow? If Wall Street is using that ridiculous estimate to keep this stock price down, then boy are we in for a SURPRISE when they CRUSH earnings forecasts in the quarters ahead.
Putting this silliness aside, even if they only do $4.00/share, at the current PE of 20 you get a stock price of $4.00 x 20 = $80/share – which is past my selling target. If they hit $5.00/share, which I think they will, then you’re talking a share price of $100. Candy from babies.
Alright, do I have to play the Armenian card? Okay, I will. The Lannett CEO is Arthur Bedrosian. The only other Bedrosian I know used to be a relief pitcher for the Phillies. Armenians make much better CEO’s than they do relief pitchers (except for my nephew who is an awesome pitcher, by the way.)
Here’s what he had to say:
Ինչպե՞ս եք
Actually that means “How are you.” He didn’t say that, I made that up. Here’s what he really said:
“Turning to our financial results, we had a tremendous quarter, driven by strong sales across multiple product categories, and a significant increase in gross margin. For fiscal 2015 second quarter, we recorded the highest net sales and net income in our company's history.
Net sales were $115 million, with gross margin of 76%, and net income was $45 million, equal to $1.21 per diluted share. We have now reported nine consecutive quarters of record net sales, as well as the 12th consecutive quarter in which net sales and adjusted earnings per share exceeded the comparable prior year period.
Our outlook for fiscal 2015 remains strong. And with the excellent performance in the second quarter, we have raised our full year guidance.
Of our additional 42 products in various stages of development, we expect to submit several additional product applications in the near future. And our plans call for continued significant investments in R&D.
We have been invited, and expect to present, at a number of investor conferences over the next several months. We remain very positive about Lannett's future.
Well, it is the best way I can answer that is, it's probably too early to provide a guidance for 2016 at this time. But I can offer my thoughts regarding our outlook for sales next year. I think our sales will increase next year. And I expect increase to be the second half of the fiscal year and primarily due to new product approvals.
Will existing products also increase, or will they decrease due to increased competition? I expect a modest volume increase in sales of our existing products, as compared to the second half of fiscal 2015. And my thoughts with regards to price increases and decreases, I think I just really touched on that.
There are no forecasted price increases in our estimates for next year. In addition, any anticipated price decreases are already in our guidance for this fiscal year. So I really struggle to say that the year would be flat. We are looking at some growth in that year. We certainly can't predict whether they'll be any price increases that will answer the growth.
But we're certainly looking at unit growth in sales of the products that we manufacture, bringing products to the market, returning them to the market, opportunities for us that we're looking at presently. So I'm – and I'm always an optimist, of course, but I see 2016 as a growth year.”
This guys isn’t full of lahmacun. What I will tell you is with the money I make on LCI, I will stock my freezer with lahmacun. Then I’ll make my wife and kids sit next to me on the couch while I watch TV.
I am HUGE!
$$$MR. MARKET$$$
www.mrmarketishuge.com
How did they do it? You know how. They would sit next to a smart person and copy their test. As far as the rest of the world was concerned, they were just as smart as the original!
Well this stuff still goes on…even after high school. You know when you go to the doctor and he prescribes you a name brand medicine that costs you $200/month? Well just after you get all pissed off and get all mad that you have to spend $200/month on medicine, the doctor tells you – Well you can always take the generic version which works just as well and you can get it for free. Huh? Not much of a choice there, is there.
So why not buy a stock in a company which makes these generic drugs which everyone is taking? Well, I just did. Today I bought Lannett Company, Inc LCI at 68.72. I will sell it in 4 to 6 weeks at 79.22.
Here’s why I like LCI:
Well, I really like the chart for starters:
The stock price has risen 104% in the last 52 weeks. That’s about 9% per month…pretty good return. Even better is the fact that the PE hovers right around 20. So it’s still pretty cheap, despite the phenomenal runup in price. Is this too good to be true?
Well, I’d like to think that the following two facts means that it isn’t. This company has a Return on Assets of 35%. It has a Return on Equity of 41%. It is simply a money machine. Lannett delivered revenue growth of 71% in its latest quarter. Earnings increased by 170%. That’s CRAZY money!
Lannett Company, Inc. develops, manufactures, packages, markets, and distributes generic versions of branded pharmaceutical products in the United States. It offers solid oral, extended release, topical, and oral solution finished dosage forms of drugs that address a range of therapeutic areas. The company provides its products for various medical indications comprising glaucoma, migraine, antibiotic, pain management, anesthetic, endometriosis, anxiety, irritable bowel syndrome, obesity, congestive heart failure, antipsychotic, tuberculosis, thyroid deficiency, dryness of the mouth, epilepsy, gout, low sodium, bronchospasms, hypertension, and gallstone, as well as HIV. It also manufactures active pharmaceutical ingredients. Lannett Company, Inc. markets its products under the Diamox, Fioricet, Fiorinal, Fiorinal w/ Codeine #3, Cleocin, Danocrine, Valium, Bentyl, Tenuate, Dospan, Lanoxin, Adoxa, Periostat, Prolixin, Dilaudid, Niazid, Levoxyl, Synthroid, Loxitane, Adipex-P, Fastin, Salagen, Mysoline, Benemid, Rifadin, Brethine, Dyazide, Actigall, and Retrovir brands. The company sells its pharmaceutical products to generic pharmaceutical distributors, drug wholesalers, chain drug retailers, private label distributors, mail-order pharmacies, other pharmaceutical manufacturers, managed care organizations, hospital buying groups, governmental entities, and health maintenance organizations. The company was founded in 1942 and is based in Philadelphia, Pennsylvania.
This company has been around for 70 years. They are doing things right, and have been doing it for a long time. I’m pretty sure that not much will change over the next few months while I am holding this stock. The long term growth rate projections for LCI continue to be in the high teens. Money Machine. Drinking machine! It’s based in Philly. Koch’s and Pat’s!
Typically, a pharmaceutical company that sells a patented drug receives special designation to hold all rights to reap the benefits of R&D for the original development of the drug for a set number of years after approval from the Food and Drug Administration (FDA). Once these patents expire, generic companies receive the authorization to develop same or similar products that often dilute the market share of the first developer. Significant amount of branded drugs are losing patent protection through 2017, which will drive short-term increases to the top-line. Aging population will act as a long-term growth driver. With all of their cash flow coming in, the company should have no problem expanding its product offerings, resulting in increases to revenues. Significant amount of branded drugs are losing patent protection through 2017.
Between 2008 and 2012, branded drugs with sales over $100b lost their patent protection. Between 2013 and 2017, most of these of branded drugs will lose their patent protection. As these branded drugs lose their patent protection, Lannett can begin manufacturing them more money…more money..more money. Also the Affordable Care Act is expected to extend health insurance to over 30 million more Americans over the next year, which will increase the number of patients in the country. What you have is more patients who each have more money to buy more drugs. The market for generic drugs is forecast to grow at a CAGR of 11% over the next four years. Every year we have more old people in this country. More old people equals more demand for drugs. We’ll have twice as many old people in 30 years as we have now.
In the past three years, LCI had 11 approvals from the FDA to manufacture new generic drugs. They have 60 more in development and under review. Do you have any idea what that will do to sales. More money… more money…. more money.
LCI management has indicated that they are looking to make an acquisition that "strengthens their tax position," and they have a couple partnerships with foreign firms. Also LCI is are one of a select few that are licensed to import and process poppy, which presents a huge advantage in their business. Poppy is a raw material in the drug production process.
Lannett has delivered record revenue figures for 9 consecutive quarters, as well as 12 consecutive quarters under which sales and adjusted earnings have exceeded year-ago results. It’s growing as fast as a tribble on the Enterprise.
ANAL-ysts expect 2015 earnings to come in at $3.96 per share, and 2016 earnings to drop to $3.76 per share. What kind of crack are they smoking? This company has no debt on the balance sheet and all it does it grow? If Wall Street is using that ridiculous estimate to keep this stock price down, then boy are we in for a SURPRISE when they CRUSH earnings forecasts in the quarters ahead.
Putting this silliness aside, even if they only do $4.00/share, at the current PE of 20 you get a stock price of $4.00 x 20 = $80/share – which is past my selling target. If they hit $5.00/share, which I think they will, then you’re talking a share price of $100. Candy from babies.
Alright, do I have to play the Armenian card? Okay, I will. The Lannett CEO is Arthur Bedrosian. The only other Bedrosian I know used to be a relief pitcher for the Phillies. Armenians make much better CEO’s than they do relief pitchers (except for my nephew who is an awesome pitcher, by the way.)
Here’s what he had to say:
Ինչպե՞ս եք
Actually that means “How are you.” He didn’t say that, I made that up. Here’s what he really said:
“Turning to our financial results, we had a tremendous quarter, driven by strong sales across multiple product categories, and a significant increase in gross margin. For fiscal 2015 second quarter, we recorded the highest net sales and net income in our company's history.
Net sales were $115 million, with gross margin of 76%, and net income was $45 million, equal to $1.21 per diluted share. We have now reported nine consecutive quarters of record net sales, as well as the 12th consecutive quarter in which net sales and adjusted earnings per share exceeded the comparable prior year period.
Our outlook for fiscal 2015 remains strong. And with the excellent performance in the second quarter, we have raised our full year guidance.
Of our additional 42 products in various stages of development, we expect to submit several additional product applications in the near future. And our plans call for continued significant investments in R&D.
We have been invited, and expect to present, at a number of investor conferences over the next several months. We remain very positive about Lannett's future.
Well, it is the best way I can answer that is, it's probably too early to provide a guidance for 2016 at this time. But I can offer my thoughts regarding our outlook for sales next year. I think our sales will increase next year. And I expect increase to be the second half of the fiscal year and primarily due to new product approvals.
Will existing products also increase, or will they decrease due to increased competition? I expect a modest volume increase in sales of our existing products, as compared to the second half of fiscal 2015. And my thoughts with regards to price increases and decreases, I think I just really touched on that.
There are no forecasted price increases in our estimates for next year. In addition, any anticipated price decreases are already in our guidance for this fiscal year. So I really struggle to say that the year would be flat. We are looking at some growth in that year. We certainly can't predict whether they'll be any price increases that will answer the growth.
But we're certainly looking at unit growth in sales of the products that we manufacture, bringing products to the market, returning them to the market, opportunities for us that we're looking at presently. So I'm – and I'm always an optimist, of course, but I see 2016 as a growth year.”
This guys isn’t full of lahmacun. What I will tell you is with the money I make on LCI, I will stock my freezer with lahmacun. Then I’ll make my wife and kids sit next to me on the couch while I watch TV.
I am HUGE!
$$$MR. MARKET$$$
www.mrmarketishuge.com
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