Mylan Labs and Cogent

Here are two stocks that I’ve been keeping an eye on lately, Mylan Labs (MYL) and Cogent (COGT). I’m not recommending them, but I think both have compelling stories, and they’re well worth watching.
Mylan is one of the largest generic drug companies. If you’re not familiar with the generic drug biz, the people who work there print money all day, then they go home. I’m skipping over some details, but that’s the basics.
Mylan has been a huge winner of the past few decades. You could have picked up a share of MYL for less than a penny 30 years ago (post many splits). Since then, the stock is up over 200,000%. Today, the shares are about 30% off their all-time high. By my estimate, Mylan is going for about 18 times this year’s earnings. Not bad.
The company has had some sluggish earnings reports lately. Sales dropped slightly as increased competition has squeezed prices. Sounds a lot like Dell (DELL).
Cogent is normally the kind of stock I avoid. The company makes fingerprint identification technology. I hate “story” stocks. The only story I want to hear is “they make gobs of money.” Cogent does that too.
This is from Gene Marcial in Business Week:

Business at Cogent, a provider of automated fingerprint and other biometric identification gear to law-enforcement agencies, has been on a tear: Sales vaulted from $13 million in 2001 to $88 million last year—and are estimated to have nearly doubled, to $160 million, in 2005. But the stock has been in a downspin since August when it was at 33. Now at 25, the stock was hit when Cogent failed to win some contracts in Latin America. But the drop, says Marion Schultheis, managing director at J.&W. Seligman, is a classic buying opportunity thanks to Cogent’s long-term growth potential. She expects it to win new contracts this year. Cogent, she notes, has a chance to be awarded a part, if not all, of a major four-year biometric upgrade at the FBI valued at several hundred million dollars. Julie Santoriello of Morgan Stanley, who rates the stock “overweight,” notes in a report that she sees $203 million in new contracts in 2006. She expects Cogent sales to jump to $251 million this year. Some 66% of Cogent’s estimated 2006 sales are already booked, she says. She figures Cogent earned 71 cents a share in 2005 and should make 95 cents in 2006, up from 38 cents in 2004.

Cogent is definitely one to watch.

Posted by on January 11th, 2006 at 3:17 pm


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