Ed’s Daily Notes for May 30th   Leave a comment

Bloomberg: Technarians at the Gate: How Google Could Become Your Next Power Company

I won’t quote the above article, but suffice it to say the power utility industry is about to get a wake-up call from the tech industry. This is definitely a must-read, with more than just Google involved. Some of the other companies which may benefit include Comcast (CMCSA), AT&T (T), and NRG Energy (NRG).

But one of the more interesting companies mentioned was Blackstone Group (BX), owner of Vivint. I would have to call them a “buy” for long-term investors, especially dividend investors willing to accept a rather odd dividend: Blackstone moves their dividend around a lot, so don’t expect consistency (it pays a quarterly dividend, with roughly around a 4%-5% yield). Their financials aren’t perfect, but they have shown some nice growth (last quarter, their revenues were up 23% yoy, and their earnings were up 58% yoy). If you like dividend growth plays, Blackstone is a strong recommendation, but I would try and get it below $30/share if possible (it closed yesterday at $31.25). I am adding BX to my watchlist.

Fox News: Erectile dysfunction drug Cialis seeking over-the-counter approval

Cialis maker Eli Lilly & Co. has struck a licensing deal allowing French drug maker Sanofi SA to sell a nonprescription version of the pill in major markets if regulators approve—still a big “if.” The prescription erectile-dysfunction drug racked up $2.2 billion in global sales last year, surpassing rival Viagra, which had sales of $1.9 billion.

Before you rush to buy stock in either of these companies, keep this in mind:

Sanofi is acquiring the exclusive rights to seek regulatory approval for over-the-counter Cialis in the U.S., Europe, Canada and Australia, and to begin selling it after the expiration of certain patents for tadalafil, Cialis’s generic name. Patents are due to expire no sooner than 2017 in the U.S. and Europe.

But the OTC project could face hurdles, including safety concerns. Sanofi will have to demonstrate to government drug regulators that men can correctly decide whether to take the drug—and use it safely—without a doctor’s guidance. Cialis, like Viagra, can cause a sudden drop in blood pressure if it is taken with certain heart and blood-pressure medications, causing fainting or even death, among other adverse events linked to the drugs.

Admittedly, the upside on this is huge. But after 2017, the generics will be all over this one. Also, there is no guaranty they will get approval. If you do decide to play this one, in the U.S., I would go with Eli Lilly (LLY), and I would buy it as a dividend play. But I would wait until this summer, because it is just too pricey here. You should be able to get it under $50, especially if they report disappointing earnings in July.


Posted May 30, 2014 by edmcgon in News, Stocks, Technology

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