Abbott Labs (ABT)

He would wait for some sort of correction. Likes this. It is a leader in its field.

Has a really good upward trend. It is a little above trend right now. Great long-term chart. Healthcare is a great long-term trend that we are in, and you can’t go wrong. It will probably come back a little bit, but nothing to worry about.

(A Top Pick Oct 29/13. Up 22.2%.) A diversified health company. About 40% of their branded generic business is in emerging markets. They expect to increase that percentage. Also, a large player in the nutritional business. Their 3rd division is medical devices and diagnostics.

Spinning off another division. He loves the drug space, which is free of volatility. His model price is $45, a 10% upside.

(A Top Pick Oct 29/13. Up 13.13%.) A diversified global healthcare company. They have 4 divisions including brand generics which is more focused on emerging markets. Also, have a nutritional business as well as a stents division along with the diagnostic division. Pays a dividend of about 2%.

His model price is $48.91, a 14% upside. Saw that they are going to spin off another company, the gift that keeps on giving. He loves large-cap drug companies. Yield of 2.02%.

Doesn’t follow this one too closely. Recent reports indicate they are doing a lot of things to restart their growth.

(Top Pick July 9/13, Up 20.37%) Prefers to stay with this part of the business after the spin out. This is where the growth is. They have branded generics which are a growth area in emerging markets. The just made an acquisition to increase presence in Latin America where pharma should double in the next 5 years.

This one has outperformed the health care sector over the last few years. Sees a 15% growth rate on the dividend, but it is low compared to others. Prefers PFE-N.

Growth in large-cap pharmaceutical business is fairly anaemic. There are not a lot of great growth prospects. What he does like about this company is that they have a medical technology business, a nutritionals business as well as a traditional pharmaceutical business i.e. all the components of the healthcare sector. Feels there is some growth from an earnings perspective. (See Top Picks.)

Is this a good time to get into health care stocks and what would you recommend? Likes Abbott Labs (ABT-N) very much. Spun off their pharmaceutical R&D business about 2 years ago and split themselves up into 4 different divisions. If looking at global healthcare companies, you can’t go wrong with something like Johnson & Johnson (JNJ-N). Products are cheap and they can easily raise costs. Also, likes Medtronics (MDT-N) which is a device manufacturer.

(A Top Pick Feb 12/13. Up 7.44%.) Still likes this. Likes their branded pharmaceuticals division. Also, have diagnostics and nutritionals. Company increased their dividend by quite a large amount last quarter. Yield of about 2.5%. Trading at an attractive multiple.

Has really been falling. Results were a little mixed. Management was quite cautious and said the 2^nd half was going to be a challenging time, partly because of difficult comparisons and partly because of the stronger US$. He just doesn’t see a catalyst and the price is a little too high for him.

A good stable company. Sold his holdings when they spun off their pharmaceutical division. They are now left with medical devices, nutritional business and their diagnostic business. Have a wonderful record of growing dividends over the years. Very steady and he feels it is underappreciated.

Sold his holdings a few months ago in order to look for other opportunities. Valuations are a little too excessive for him. He prefers to buy in the 12-13 times earnings range. Doesn’t see growth in this one.