Barker recently bought more shares of Accredo Health, a specialty distributor of biotechnology drugs in Memphis, Tennessee. She started the position in January 2000 for a split-adjusted share price of US$14.80. "We think this is a great backdoor play on biotech," she said.
"Most biotech drugs can't go through normal distribution channels because they require a lot of service. Patients need counseling on how to mix and inject the drugs, and someone to make sure they do it."
Accredo distributes drugs for chronic conditions, creating a long-term opportunity, she said, adding, "They have a good reputation with the industry, so they'll be chosen as the preferred distributor for new drugs.'' Moreover, investing in distributors mitigates a common risk with most biotech stocks -- that the Food and Drug Administration will not approve a new drug. On Friday, the shares closed at US$33.
Another favorite is the Cognizant Technology Solutions Corp, in Teaneck, New Jersey, which provides programmers and information technology services, mostly to major American companies. Barker began buying shares in September 1999 for a split-adjusted US$15.47, and buys more when prices dip below US$40. While the company has some marketers in the US, most of its staff work in India. "To maintain a big mainframe application at a big bank, you can access a great talent pool in India for about 60 percent less than it would cost in the US," she said. That is particularly important today, she added, as corporate budgets shrink.
Cognizant shares closed at US$44.03 on Friday.
Barker started buying shares of the Cabot Microelectronics Corp, in Aurora, Illinois, in October for US$47.75 a share, and she adds more at prices below US$60.
Cabot is a play on the big opportunity in smaller, faster semiconductor chips, she said.
As more data is packed on smaller chips, she said, a chemical-mechanical polishing process is needed. Cabot holds a 90 percent share of the market for the chemical used.
"Their opportunity should double over the next three years even if semiconductor sales are flat," Barker said, "because the chips will be bigger and more complex, so they'll need more chemical."
On Friday, the stock closed at US$67.83.
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