Shire plc (SHP) is a FTSE 100 global pharmaceutical company. It describes itself as “a rapidly growing global specialty biopharmaceutical company”. This growth is the key reason for purchasing SHP. It is forecast to grow EPS 32% and currently trades on a forward PE of 15. Once again there is little debt, a small dividend and excellent cash generation and so SHP meets the same criteria as the rest of my portfolio.
SHP has been making higher highs and higher lows for the last few years and is still comfortably within its uptrend channel.
More recently though the shares sold off in early April after the recent results and my entry is a 12% lower than recent highs in Feb 2012. The daily RSI has come back from being oversold and the 5 day SMA has crossed the 20 day SMA and the 20 SMA appears to be turning up. There is certainly a risk that the shares could fall more but this appears to be a reasonable entry point.
Another reason for adding SHP at this time is that my portfolio was too concentrated on small illiquid (and volatile) AIM shares. AIM shares offer good upside potential but I was alerted to the imbalance in my portfolio and have decided to address this. Going forwards I have decided to be approximately two thirds in small caps and one third in FTSE 250 stocks.