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Amgen Inc. (AMGN)—a diversified biotechnology company with multiple therapies and drugs on the market—is near an entry point for a longer-term investment (6 months or more).

AMGN has been a rising channel—albeit a messy one—going back to 2016. Throughout that channel, the price has had multiple declines between 20% and 28%. The most recent drop off the late-2022 high ($296.67) is approximately 20% with the price hovering around $236.

The rallies higher, off the channel bottoms, have run 25% to 49% before coming back to the bottom of the channel. For a stock in a long-term uptrend, higher returns are possible if holding for a longer period of time, assuming the uptrend continues. (I draw trend channels in a specific way that encaptures MOST of the price action and alerts me to potentially important AREAs.

I prefer this stock for simply buying and parking for six months to a year (or more) as it hopefully chops its way higher again. As you can see, the price movement can be rather ragged at times.

(Click on image to enlarge)

AMGN Chart on TradingView

This chart is not adjusted for dividends. When adjusted for dividends, the gains are greater and the drops are smaller.

On the last four lows which occurred just below the lower trend line, I have drawn some little red lines to show that the price often makes a low, bounces a little, and then makes a slightly lower before rallying.

As of Feb. 16, this has occurred again. Feb 16 has undercut the Feb. 2 low.

Entry: Now that this “undercut” has occurred, if the price levels off quickly and then rallies back above $240 I am a buyer. Basically, I want to see the price start moving back up before entry.

Price Target: The price target over the next 6 months is near $310…potentially higher if holding for the long-term. That’s 30% upside from the $240 area.

If holding for the long-term, expect more of this 20%ish down movement followed by 30%ish up movement over the years.

Stop loss: The price is dropping as I write this. In order for me to consider a trade, it needs to stall out relatively soon…ideally by the $232 area. Then I’ll enter if the price moves back above $240. Stop loss goes below the recent swing low that just formed or approximately 4%-5% below entry.

30% upside for 5% risk is a 6:1 reward:risk.

Holding for the long term is supported by some good fundamental numbers and statistics:

• AMGN has grown its yearly earnings per share (EPS) by 35.1% over the last five years. Although, that is expected to slow to 4.1% growth yearly EPS growth over the next five years.
• It is one of the most stable stocks available in the US. Its biggest decline over the last decade is under 30%. More than 50% of S&P 500 stocks have had a larger than 50% decline in the last 10 years.
• AMGN has been steadily raising its dividend for more than 15 years. The dividend amount has increased, on average, 10% per year over the last 5 years. The current dividend yield is 3.6%.
• AMGN has outperformed the S&P 500 over the last decade, averaging a 13.8% yearly return versus 12.5% for the SPDR S&P 500 Trust (SPY).

AMGN is a steady long-term performer and offers a nice upside for a several-month trade or longer.

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