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Inside Wall Street


New Life at Life Technologies

President Barack Obama's move to end the ban on funding for embryonic stem-cell research and his vow to advance scientific studies are brightening the outlook for life sciences companies. They also expect a long-term lift from the stimulus package. One global medical player that some pros predict will gain is Life Technologies (LIFE), which aids biotech and pharmaceutical companies.

"Life Technologies is one of the top providers of cell lines and serums and should benefit from the increased funding," says Anthony Butler of Barclays Capital. His top stock pick in the life sciences group is Life, which derives 20% of its revenues from the National Institutes of Health (NIH).

Life's tools for genetic analysis and data interpretation help researchers at NIH and drugmakers in their quest for new pharmaceuticals. Butler says Life's 2009 earnings forecast of $2.40-$2.55 a share doesn't include any gain from the stimulus. So he sees earnings exceeding that estimate.

Life has been climbing since it sank to a 52-week low of 21 on Nov. 20; it closed at 32.82 on Mar. 25. The "stimulus could be a major tailwind," and NIH spending "could add 10% to consensus earnings by 2010," says Marshall Urist of Morgan Stanley (MS) (it has done banking for Life). He rates it overweight and sees earnings of $2.56 a share in 2009 and $3.12 in 2010.

Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

Pinching Pennies at Family Dollar

The tough times haven't been a big problem for Family Dollar Stores (FDO) largely because its 6,600 retail discount outlets in 44 states across the U.S. offer products priced at $1 to $10. Its strategy of providing consumers with compelling values while managing to keep costs and prices stable have allowed it to maintain its streak of constant earnings in spite of the weak economy, says Ryan Crane, chief investment officer at Stephens Investment Management Group, which owns shares. Many Americans have embraced budget-conscious spending, bolstering Family Dollar's sales and earnings. This kind of thrifty shopping won't end anytime soon, Crane adds. The stock has been on the rise, to 32.06 a share on Mar. 25, up from 18 last June 24. And it could easily double in 12 to 18 months, he figures.

Neil Currie of UBS (UBS) sees earnings of $1.82 a share for 2009 and $1.92 for 2010.

Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

Heating Up LSB Industries

One goal of the Obama stimulus package is to invest in renewable energy and fuel efficiency. Many companies will benefit, and some investors say a smart way to play the stimulus is through LSB Industries (LXU), an under-the-radar outfit whose shares have climbed to 10.29 from a 52-week low of 6.62 a year ago. It's a leader in geothermal and other energy-efficient heat pumps and fan coils, used in residential, commercial, and government buildings.

LSB should gain from the $12 billion in the stimulus plan designated for making federal and state buildings more energy-efficient, says Daniel Mannes of Avondale Partners, who rates the Big Board-listed stock outperform, with a 12-month target of 14. Schools will also get funding to upgrade their energy systems. Geothermal pumps save money as they require less energy to operate, explains Mannes.

Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

Marcial writes the Inside Wall Street column for BusinessWeek. In 2008, FT Press published the book Gene Marcial's 7 Commandments of Stock Investing.


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