Eli Lilly & Co. (LLY)

Their popular obesity drug is like AI--a lot is already priced in, though the obesity drug may be applicable to other ailments.

Big difference between a company and a stock. It's like buying a jacket for different price points of $1000, $300, or on sale for $150. You make an investment/purchase decision. 

LLY and NVO are great companies, but you have to look at how expensive they are. Quite expensive at around 50x earnings. Good growth rates. A reasonable multiple for a drug company is sub-20x, and these won't get there via discounted cashflow until next decade. That's a long way out.

He looks for things that have yet to be priced properly. He owns MRK.

The fundamental story is compelling, enjoying momentum and a technical breakout, but it could pause before it resumes its climb.

A drug approval was delayed and shares are down only 2% today. If there's a market correction, LLY will also fall. But their fundamental story has not changed and he still believes in it.

Was upgraded today. It trades like a biotech. The response to their strong earnings on Feb. 6 has been purely positive, rallying. The catalyst are the momentum funds buying this which have a 5% weighting in LLY. Also, the fundamentals are in place.

There's a huge market for the weight-loss drug. Also, LLY has a strong drug pipeline: ulcerative colitis, Alzheimer's, for instance. 

Appreciates what it's done. Trades north of 50x current earnings, expected growth rate is pretty exciting. Ask yourself: is it worth paying up, when peers are trading around 15x? He'd look at AMGN.

It reports Tuesday. It comes down to their weight-loss drug sales. How quickly can they rump in production of it in their factories to meet demand?

Is up 83% in the past year. Their hit weight-loss drug is in such demand that you can't find it in New York City. Buy some tomorrow, then buy more at a 5% downturn.

Excellent business, but would wait for share price weakness before buying. Performance has made shares expensive. Weight loss drugs performing very well. One concern is that weight loss drugs are unproven. 

They make key drugs for obesity and diabetes. Shares rallied strong last year and continue to do so.

High PE. Huge expectations baked into the price. Long-term effects of these weight-loss drugs are not yet proven. Any hiccup or negative news will slam the stock, and that might be your entry point.

He should have deemed this a buy, don't trade stock, but he wasn't sure about their latest drug test results. Turns out that those results were fine. he got that call wrong.

They have the best model among pharma, spending years to develop their drug pipeline, like their weight-loss drug. Their superior research is their secret sauce. They don't have a patent cliff like their peers. They are a growth name without buying other companies.

Novo and Eli Lilly have both run up, but there's still more room to go, given the strong demand for their weight-loss drug. Insurers will probably pay for these drugs, because without them consumers couldn't afford them. Sure, others are developing their own drugs, but it's not easy. Pfizer just announced it's giving up.