NEW YORK (CNN/Money) -
With the pharmaceutical industry facing a number of challenges, including competition from generic drug firms, pressure to lower medication prices, and frequent lawsuits, one money manager appeared on CNNfn to suggest some stocks in the sector he believes will move higher in the future.
Paul Abel, portfolio manager with Kinetics Medical Fund, sees Medarex as a value play in the drug sector.
"Recently, Medarex was trading at about three dollars a share, which was a $200 million discount to its cash position. They have roughly $450 million in cash, which will allow them to pursue their drug development for at least the next five years," Abel said. "It's important to remember that it costs anywhere between $250 million and $1 billion to bring a drug to market. So companies have to be appropriately capitalized in order to try and move their R&D forward."
| Paul Abel's picks
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Novartis is Abel's second selection. "I still think this is a great company. Novartis continues to do great R&D and continues to bring new drugs to market. I'm looking forward to them hopefully getting FDA approval for their new irritable bowel drug, Zelmac, as well as increased indications for their revolutionary drug, Glivec," he said.
Funds under Abel's management own stakes in the companies mentioned.
Shares of Medarex (MEDX: up $0.03 to $4.10, Research, Estimates) are in a 52-week range of $19.25 to $12.55.
Novartis (NVS: up $0.76 to $37.11, Research, Estimates) shares have been between $44.10 and $33.95 in the last year.
Donald Selkin, director of research with Joseph Stevens & Co., likes the dividend yield on real estate investment trust Impact Mortgage.
"It has a high dividend yield, and as long as interest rates and mortgages stay low, these stocks should do well. But again, if you are trying to get involved in this group, buy them now, because you want to own them through the dividend period," Selkin said. "The dividend data is coming up at the end of December. So, get in now and buy them so you are guaranteed that very good dividend."
| Donald Selkin's picks
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Selkin's second selection is Coach. "It has been a stock that has added on a lot of new stores, they've beaten their earnings, and the stock has been doing well. So, on dips, I would buy it," he said.
Dell Computer rounds out Selkin's picks. "It's a premier technology stock," he asserted. "The interesting thing about Dell, is that it never collapsed when the Nasdaq got destroyed earlier this year. It stayed in a very, very definite range between $30 and the mid $20s. If you are adept with Dell it has been a godsend, because it just stayed in the specific range, so you have your exit points and entry points. And to me, today's level is a good entry point for Dell."
Joseph Stevens & Co. owns stakes in Impact Mortgage and Dell.
Shares of Impact Mortgage (IMH: up $0.04 to $11.84, Research, Estimates) are in a 52-week range of $13.48 to $7.45.
Coach (COH: up $0.68 to $33.18, Research, Estimates) shares have been between $35.70 and $17.00 in the last year.
Shares of Dell Computer (DELL: up $0.86 to $27.49, Research, Estimates) are in a 52-week range of $31.06 to $21.90.
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