Well, this one's actually turned out to be a winner for me. . .

Let's get the Basic Research stuff going again. . .

I think I'm gonna take this one off at market open while I can still get out with a
profit. . . SIAL would have to move like BIDU for me to see a big profit on this. . .
This is a classic "Right stock, wrong position" mistake and I have to own this one. . . I
should have read my original post and just gone long the stock. . . Which I may yet do.

finanically. my advice right now is toxic.

Wuzzat 'sposedta mean???

chart is awesome. i would love to comment but i dont want to hurt ya.

I have a puzzle. . .

News hit on Thursday that California was floating the bond issue authorized by ballot
initiative to fund stem-cell research. I got in on this with a 3-1 ratio backspread on
the Nov 45/50 calls. Here's the position:

Short 10 NOV SIAL 45 @$4.05 (Now $5.10)
Long 30 NOV SIAL 50 @$0.98 (Now $1.47)

I put on the trade for a credit of $1110.

The stock has moved on the news. Right into the "Sweet Spot" for the Path of Maximum
Frustration. If the stock continues to move, I will be in fine shape, however, if this
thing stalls, I'll be right in the house of pain as the curves steepen. I can sell the
position at market open on Tuesday for a small gain, or I can stay in it looking for a
continued march higher. Or I can try to finagle the position and remove some of the risk.
. .

How would you trade this one?

Not a lot of enthusiasm for this one, eh? Kinda like CUBIC.

Well, here's a little updated research. A major competitor of SIAL is Applied Biosystems,
a privately held company. Applied Biosystems is worth noting as it is a contract supplier
to Northrop-Grumman for a US Postal Service contract.

"US Postal Service??? Why is the Post Office using biotech stuff???"

I'm glad you asked. Remeber the anthrax letters? Two USPS employees died and a number of
others were sickened. Today, the USPS uses a system from NOC that "sniffs" every letter
in the system for biohazards using a real-time PCR genetic test. Applied Biosystems won a
coup with this one.

Sigma-Aldrich Corporation, together with its subsidiaries, engages in the development,
manufacture, and distribution of various biochemicals and organic chemicals worldwide. Its
chemical products and kits are used in scientific and genomic research, biotechnology,
pharmaceutical development, the diagnosis of diseases, and as key components in
pharmaceutical and other high technology manufacturing. The company offers biological
buffers, cell culture reagents, biochemicals, chemicals, solvents, and other reagents, and
kits. It also sells organic chemicals, analytical reagents, chromatography consumables,
reference materials, and high-purity products. In addition, Sigma-Aldrich supplies
immunochemical, molecular biology, cell signaling, and neuroscience biochemicals; and kits
used in biotechnology, genomic, proteomic, and other life science research applications.
Further, the company supplies organic chemicals and biochemicals used in development and
production by pharmaceutical, biotechnology, industrial, and diagnostic companies.
Sigma-Aldrich serves various customers, including commercial laboratories, pharmaceutical
and industrial companies, universities, diagnostics, chemical and biotechnology companies,
and hospitals, as well as non-profit organizations and governmental institutions. The
company was founded in 1951 and is based in St. Louis, Missouri.

Sigma has a recent prject that is gathering steam for them called MyFavoriteGene, an
online database of genetic data. This data links not only the gene data but also the
products that Sigma sells that are applicable to working with that gene. Finding
everything that a researcher needs in one place can drive sales.

Sigma supplies the stuff that you need to do biotech. Bottom line: If you’re company
is doing biotech, they’re doing business with SIAL.


Sigma-Aldrich financials are available online, but suffice to say that SIAL is a going,
and growing concern with quarterly revenue growth of 13.20% year-over-year and quarterly
earnings growth of 13.40%. Float is 130 million shares, with just 2.5% short interest.
SIAL has $190 million cash and a debt-to-equity ratio of just .39. At its current price
$47.21, the PEG is at the top end of what we’d like. Also, SG&A is a bit higher than
I’d like.

Sigma has a recent bummer in that the State of Missouri is currently investigating one of
their facilities to determine if there is an environmental cleanup that needs to be done.
This may actually give us an entry point. If Sigma has to clean up a mess, this may
result in a decrease in profits. However, this will not affect the company’s organic
growth. The share price may suffer on this news, and this is our opportunity.

Sigma stands to benefit from the prospects of a Democratic administration and a Democratic
Congress, as health care will be a priority in such an environment. In addition to a push
for universal health care, a Democratic administration will reverse the current
administration’s policy toward stem-cell research, as well as increasing funding for HIV
(AIDS) research as well as cancer research. Sigma provides the stuff that is used to do
that research.

So here’s the trade: We wait for SIAL to come in a bit and allow us a better entry
point, and then we go long. We’re playing the organic growth of the company, and
waiting for the election catalyst to provide a fast boost, and an increased income stream.
This is a multi-year play, so patience is the key. I’d like to see SIAL come in to $39
to $42 before pulling the trigger.