Amgen (AMGN): Undervalued Biotech Stock to Buy for 2011

Amgen, Inc. (NASDAQ: AMGN) – This company is among the leading biotechs in the world.

Until recently, biotech stocks were among the worst performers of 2010. But relative strength studies show that the sector is emerging as a top performer with many undervalued, high-quality companies at reasonably low price-to-earnings multiples. As a leading investment-grade stock in the sector, AMGN is a top choice for a long-term investment.

After languishing for three years within a 20-point trading range, the stock is reaching the apex of a triangle that will most likely break to higher prices.

Note the recent surge in volume, along with a trading gap at $54 to $55 and a strong buy signal from the Moving Average Convergence/Divergence (MACD) indicator.

AMGN could retrace back to support at $54, but a high-volume break through $58 would be a strong signal that a major move higher is about to occur.

S&P maintains a “four-star buy” on AMGN with a 12-month target of $68.