Thursday, February 10, 2005

C for Cocktails - Celebrex, CMOS & Consoles

"Its a stock pickers market" is a term often heard especially from the
active fund managers who want your money and those commissions.
Considering that the S&P 500 returned a 9.5% last year (11% with
dividends reinvested), I am not sure you need active money managers,
but here is my cocktail for you to mull over as you decide to invest
your portfolio tonight two shots of Pfizer (PFE, $25.55) (disclaimer -
I own it) with one pint of OmniVision Technologies (OVTI, $16.99) and
a dollop of Electronic Arts (ERTS, $65.60) should be potent
combination of risk and caution.
Pfizer which has been clobbered lately is as much a sure thing as
there can ever be in the stock market. The world largest pharma
company, a pipeline filled with products up the wazooo, a friendlier
than ever administration in Washington. Yes there are some clouds with
the Vioxx and Celebrex controversy but tell me of one successful
company that does not have lawsuits or public perception problems, its
almost a badge of honor these days. And most of the Cox-2 inhibitors
controversy is going to rain down on Merck and drown them while Pfizer
will sail smoothly. So Pfizer is a no brainer especially if you can
stay invested for 2-3 years.
The most risky and maybe rewarding pick of the season is OmniVision
Technologies - they are a CMOS sensor manufacturer, 80% of the cell
phones that can take pictures are equipped with their sensors. They
have a strong balance sheet with a good cash position and no
liabilities. Having said that 70% of the company's revenue comes from
the cell phone OEM's. So if there is a major technological shift, or
if taking pictures with your cell phone is no longer cool, then this
company may see a lot of pain. But my guess is that this scenario has
a small probability and the company should see good growth.

Lets get that drink ready shall we Electronic Arts is the 10,000
pound gorilla in the video games market, $2.2B in cash and no
liabilities gives them an iron clad balance sheet. They have recently concluded deals with ESPN. Their NBA and other games are rocking the street, although they have had good competition from Take Two's Grand Auto theft II. But this San Francisco Bay Area company has the makings of a Hollywood media giant. Video games are here to play and stay. Well cheers and enjoy the drink.


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