Merck & Company (MRK)

The small and mid-cap pharma sector has been on fire he says. On a relative basis, he believes, this may lead to acquisitions by the larger players. MRK-N has a big war chest to do this. He has not entered this space yet, but it is starting to check all his boxes for entry. He would suggest an ETF to diversify risk, especially at this stage of the cycle.

He started buying in December and thinks the market has beaten the stock up over the Trump Administration move to curb pharmaceutical pricing. He thinks the market is underestimating sales growth. The sector is in a secular bull market. Yield 3.1%. (Analysts’ price target is $69.16)

(A Top Pick September 14/17 - Down 4%) Nothing has changed. Still good dividends and fundamentals. Solid holding.

Like the stability. They are one of the leaders in immunotherapy and other lines of business. Core holding. Dividend yield is 3.1%. Market cap $165.8 billion. (Analysts’ price target is $69.16)

What healthcare stock to buy? In Canada, he likes Chartwell, in the U.S, Merck (MRK-N), and in Europe, Novo Nordisk.

He thinks the worst of the drugs going off patent is over. These guys have been really hurt by their patent cliff. It is a really good value name. He sees resistance at $67. It is a good sector to be in. (Analysts’ target: $68.79).

It is a stable stock with stable earnings. But the price momentum is weak.

A large, diversified pharma company with a hepatitis C franchise, but are really into immonotherapy and chemotherapy. They are getting positive results with their drugs, and will be the leader in this space. Own this with BMY-N and AZN-N preferrably (and not alone). A must-own stock in healthcare given their pipeline and leadership. Dividend yield of 3.5%. (Analysts' target of $67.25)

Unfortunately, pharmas/biotech have had a bit of a rough go. It was the mega-caps, not the small guys. This one reason he likes using ETF's in his mix. He prefers using the Spider S&P Biotech ETF (XBI-N).

He likes their leadership in drug therapies. They have their HEP-C and diabetes franchises. It is an easy hold for him. They are well diversified. They are number 3 in animal health products. It has a PE of 15.5 times next year’s earnings. (Analysts’ target: $70.00).