Investor Link adds Baker Hughes, beat-up biotech

Published Thu, Apr 7 201611:45 AM EDT

Stephanie Link , managing director at TIAA, scooped up shares of two beaten-down names for her model portfolio on Wednesday. In the hopes of climbing the ranks in CNBC Pro's investing competition, Link took a shot on Baker Hughes and Alexion Pharmaceuticals — two stocks that are both down in 2016, but have recently started to trend higher. Here are the reasons why she's bullish on these stocks: Source: FactSet After news that the Justice Department challenged a potential deal between Baker Hughes and Halliburton citing antitrust concerns, Link believes the door is open for a new suitor to come in. "I think with the overhang removed the stock can quickly trade higher on fundamentals and a possible takeout," Link wrote in an email to CNBC Pro, pointing to General Electric as a potential acquirer. But even without a deal on the horizon, the investor thinks Baker Hughes may be undervalued based on its strong fundamentals. "The company has strong North American assets, has lagged the group and with stronger management I believe has higher operating leverage," Link stated. The money manager also predicts a rebound in energy prices ahead, another catalyst for the stock to move higher, she said. Read More Street Explained: Riding rally in dividend stocks Similar to Baker Hughes, Link thinks the 20 percent drop in the stock of biotech Alexion this year is already factored into the shares. According to her analysis, ticker ALXN trades at 17 times forward earnings for a company expected to grow at 30 percent. Link believes valuations along with a strong pipeline of existing products will result in the stock moving higher from here. To make room for these two trades, she sold out of her positions in Parker-Hannifin and EOG Resources , two stocks that are up more than 5 percent since she bought them. On Thursday, Jon Najarian also made a trade, buying shares of Starbucks after spotting unusual options activity. "The average full-session volume of calls has been 15,000 contracts. Today in the first 45 minutes we show 15,000 calls changing hands," he wrote. Najarian, whose expertise expands to the options market, believes the bulls may be targeting shares of the coffee chain on the back of expansion news, specifically in China, where the company is expected to open 500 stores. Starbucks shares were up modestly midmorning Thursday. A Baker Hughes spokesperson did not immediately return a call for comment on deal speculation. Disclosure: Stephanie Link owns shares of Alexion Pharmaceutical in the funds she manages at TIAA. She doesn't have a position in Baker Hughes. Jon Najarian owns call spreads and shares of Starbucks.

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Stephanie Link, managing director at TIAA, scooped up shares of two beaten-down names for her model portfolio on Wednesday.

In the hopes of climbing the ranks in CNBC Pro's investing competition, Link took a shot on Baker Hughes and Alexion Pharmaceuticals — two stocks that are both down in 2016, but have recently started to trend higher.