is it cheap at these levels, page-2

re: is it cheap at these levels - hotnickel Hi Hotnickel

Cheap? Depends on the length of the position you are looking to take in my view. Chartwise, it's still pretty risky short term as it has clearly broken long-established resistance levels in recent weeks and today's sudden sharp upward break will bring its own round of profit-taking.

But if you are asking whether the current price will seem cheap three years from now, I'd say "most definitely." For my money, NRT has the best potential and the broadest suite of products in development of any biotech listed in Australia.

Strong cases can of course be made for other companies that have exciting products in development (I also like AGX's ThromboView technology for example) but NRT has a breadth and diversity that is unmatched in my view. If you research its cancer, heart disease and skin cream drugs-in-development and consider the enormous market prospects of even one of these in isolation, I think Novogen stands out as the best prospect for investment returns in the entire local biotech sector. It is clearly not a "one-horse-wonder."

Whether these investment returns will come quickly enough for "get-rich-overnight" types is another matter. We have all seen the recent (irrational, in my view) sell-off in response to the partial phenoxodiol trial results over the past two weeks and such pull-backs are inevitable along the way towards commercialization of ground-breaking drugs, especially with Biotechs where the science is easily misunderstood and only quick, unambiguous results are rewarded. This approach may work well for gold stocks but is less appropriate to biotechs in my view.

I have taken a long term position in the stock and feel confident its share price will one day overshadow even strong performers like Cochlear.

In summary, I'd be wary of taking a short term position in the stock as it has proven very volatile and is prone to sudden reversals as news is announced. But are the long term fundamentals sound? I believe so, based on the research I have done. However every investor must make that decision alone after independent research and the above should be viewed as nothing more than a considered opinion.

R/Gupper