After Putting TPX to Bed for 3100%…We Do Drugs For an Additional 9900%! (AMGN, TPX)

Howdy, g’day and welcome.

We have a potential 9900% winner on offer today via Amgen Inc. (NASDAQ:AMGN), developers of a number of therapeutic applications that kill you even as they heal.

But more on those blokes in a just a moment.

First, we’ve got some cash on the table.

STUFF IT IN YOUR POCKET!

It’s our February 23^rd TPX trade, and it’s is now ripe for closure.

You’ll recall that on March 20^th we shut down the trade’s long June 16^th PUT spread, but left the short CALL open.  That gave us an overall credit of $2.20.

And today, we finish the job.

We’re buying back the June 16^th 40 CALL for $0.60 and walking with $1.60 on just a nickel expended.

And that’s a mighty fine 3100%.

[N.B., we had originally forecast a 4300% take on the trade, fully expecting the short CALL to expire worthless.  Alas, we’ll have to suffice with a mere 3100%…]

And now we return to the narcotic portion of our show.

AMGN claims that it “focuses on inflammation, oncology/hematology, bone health, cardiovascular disease, nephrology, and neuroscience therapeutics”.

But we all know that’s not true.

What they focus on, in fact, is making lots of money from people who’ve been boondoggled into thinking that disease and ill health are a natural part of life.

But more on that another time.

Let’s first look at some numbers.

• Fundamentally, AMGN sports a P/E of 15.18, which, on face, doesn’t look so bad.
• Consensus Forward P/E, however, is just 11.86, meaning analysts are expecting a further retrenching of stock price.
• Dividend Yield is also reasonable at 3.81%, but all things considered, we don’t believe it will be maintained, as you’ll see below.
• Price to Book is a wild-eyed 22.32, which, in our opinion, is just plain stoned, because…

• This is also a company with a Debt to Equity ratio 11.52—a figure that casts great doubt on AMGN’s ability to pay back its lenders, let alone uphold its dividend and keep trading at 22x its break-up value.
• And more than that, Earnings have grown at a rate of just 2.00% per year for the last five years, and are expected to grow at a rate of just 1.72% for the NEXT five years.

In other words, AMGN’s got inferior bone health and its stock price suffers from inflammation.

Yee Haw!

In the real world, regulators are prohibiting the company from proceeding with its $28 billion takeover of Horizon Therapeutics, and that (along with the company’s increasingly unmanageable debt) is making investors nervous.

Many believe AMGN will have to issue a new round of shares to pay off the near $50 billion in liabilities it now possesses.

Now take a look at the daily chart—

May the G-d of Israel deliver all our enemies into our hands!

With kind regards,

Hugh L. O’Haynew

Follow @HughLOHaynew