Eli Lilly & Co. (LLY)

Plenty of upside from its improved diabetes and obesity drug. Their Alzheimer's drug has potential As a drugmaker, it won't be hostage to a recession. Drugs will keep selling.

Around 15% topline growth. Likes healthcare, great fundamentals and 23% expected EPS growth.

Focusing on its diabetes and weight loss drug. The weight loss drug could be one of the biggest drugs of all time, when it starts selling in the next 2-3 years.

It seems cheap, because they have 4-7 billion-dollar drugs in their pipeline. So, estimates will have to move up dramatically and the PE will be lower. Therefore, the stock doesn't look as expensive as it seems.

LLY vs. NVO NVO is focused on weight loss and diabetes. One issue is the liquidity, as it doesn't work well for his covered call strategy. Still fairly expensive. LLY had great weight reduction results recently. LLY is at a discounted valuation, a more diversified business, and exposure to Alzheimer's. He prefers LLY, but you'd be OK on both.

Diabetes is an epidemic and LLY is a leader in therapeutics for this disease. Also it is making a major impact in the diagnostics and monitoring of Alzheimer's. Healthcare in general is one of the three best performing industries of all time but has under-performed until the beginning of this year. It has spun off its animal health division. It is defensive and timely in a bear market. Buy 16, Hold 8, Sell 1.

Now, you need boring, low PE stocks, the opposite of those hurt by inflation, such as Alphabet or Meta. They sell at historically cheap PEs. In healthcare, Eli Lilly is his top pick.

There is an epidemic in Diabetes and it is in this field. Also in area of Alzheimers. Has made advancements in diagnostic tools and monitoring and treating patients. This is a defensive business not affected by a slowing economy. Buy 16 Hold 8 Sell 1

They report Thursday. They have drugs for Alzheimer's and diabetes in its pipeline.

As the Fed is about to raise interest rates, buy companies that make real, concrete things. This includes pharmas. Since he started buying this in October, it's rallied. It's up 58% YTD. Last week, it held an investor day and soared 10% in one day, but then pulled back. Why he likes it? Their drug pipeline is the best in the industry. They spend a lot on R&D. In 2014, LLY that began delivering20 new drugs to the market. Seven could do north of $3 billion in sales, or 58% of company revenues. They won't lost patent protection for several years. Obesity, dementia and RNA-based drugs are their three main areas of focus. The first two are large (and sadly growing) markets. Their Alzheimer's drug data has been stronger than Biogen's. 2022 will see (likely, he feels) approval of these two drugs and could amount to $10-15 billion in sales. Great managers. Operating margin has leapt from 20.7% to 30%; managers predict rising to 35%. Their 2022 outlook is bullish with rising EPS. Plans to raise dividends and buyback shares in the future. R&D spending results in high results (revenues). Oncology is another area of strength.

They hold an investor meeting on Wednesday. He expects good reports about several drugs: one for diabetes, another for Alzheimer's, which could be multi-billion franchises later.

A play on their Alzheimer's drug. He's long liked this.

The catalyst is the higher volumes from more people with diabetes. Diabetes is expected to rise by 20% by 2050. Lots of room to thrive. Novo Nordisk is first out of the gate and has an oral pill. LLY is not bad either.

Trades at 34x PE, because investors believe in LLY's new Alzheimer's drug. Also, all drug stocks are rallying because of the Delta variant and calls for a booster shot.

Eli bounced today off Biogen's monster move after the FDA greenlit the latter's Alzheimer's drug.