It’s easy to have a smart-sounding opinion on these things. But these are questions for which you can never know the answers with any certainty. When I explain this to Members at investment conferences and seminars, however, I often hear the more experienced ones say, “Well, of course you can’t know… but you have to guess.”

No you don’t. And this is just my point.

You shouldn’t base your investments on the equivalent of a coin flip. Forget about timing the market. Instead, allocate the assets in your portfolio properly, diversify broadly and run trailing stops behind your individual stocks. This is the foundation of our investment system… and there is no economic forecasting or market timing required. And that’s a good thing since guessing the market’s next move sounds intuitively appealing but has one minor drawback.

It doesn’t work.

However, if you’re skittish about the economic outlook there is more you can do to ratchet down the risk in your portfolio. For instance, you can concentrate your investments in companies that are immune to the business cycle. Parexel International (Nasdaq: PRXL) is a good example.

Unprecedented Demand

Based in Boston, Parexel helps pharmaceutical, biotechnology and medical device companies develop and launch their products. Its services are in high demand.

Pharmaceutical firms need to have new medicines approved to replace the revenue from compounds that go off patent. And we are currently experiencing unprecedented levels of patent expiration.

Large drugmakers want to get new products to market quickly. To improve efficiencies, many are now outsourcing their clinical research. Parexel anticipated this trend years ago and positioned itself for the opportunity. Today it offers a broad range of clinical development capabilities, regulatory affairs consulting and commercialization services.

Many drug firms have formed strategic partnerships with Parexel, including giants Eli Lilly, Pfizer, Merck and GlaxoSmithKline. These partnerships have caused Parexel’s order backlog to surge.

In particular, drug-development companies want to execute better late-stage clinical trials. And while Parexel’s services span all phases of clinical trials, its specialty is the last phases of clinical development testing – Phases 3 and 4. So it is a key beneficiary of these trends.

Heading Higher

Despite the lackluster economy, recent sales and earnings at Parexel have been exceptional. Last quarter, for instance, net income surged 29% on a 28% increase in revenue.

Also, the company completed a $200 million share repurchase plan. This is another positive. When you divide higher profits by fewer shares outstanding, you get stronger growth in earnings per share. And that – along with beating expectations – is what propels stocks higher.

In sum, Parexel operates in a recession-resistant industry. Sales, earnings, profit margins and market share are all growing nicely. And the company’s massive, multibillion-dollar order backlog assures us of sharply higher earnings in the months ahead.

Parexel announces quarterly results again on August 5. Expect good news.

Good investing,

Alex

Alexander Green, Chief Investment Strategist, The Oxford Club

Click Here to Comment

There has been a lot of chatter in the financial markets lately about whether the economy will keep recovering and …

How about one the insiders themselves are piling into, like Western Gas …

We have a 12% short-term gain in Flextronics (Nasdaq: FLEX). This Singapore company is one of the …

America’s leading satellite TV provider and Oxford Trading Portfolio recommendation, DirecTV (NYSE: DTV), is set to make a big “down payment” on Internet TV in the coming weeks.

The company offered to buy online TV and movie …

Welcome to this week’s issue of Peak Energy Weekly. Today was looking like it would be the fifth day in a row that the Dow was up or down triple digits. As we write …

The stock …