Merck & Company (MRK)

As a general view, he feels there are some good opportunities in the healthcare space. His office owns Pfizer (PFE-N) instead. Bad news in healthcare is behind it. With the aging population, this sector would be a good area to be invested in for the long-term. 3.5% dividend yield.

Pharmaceutical sector was way out of favour for 12-13 years. Recently, what made it unattractive has made it very attractive. Have predictable cash flows. Paying out about 50% of their earnings, (3.46% dividend yield) and this could go higher. Have recently been having good success in science.

Pharma is one of the strongest performing groups after many years of underperforming. This company has an earnings yield of just over 8%. A US treasury bond yield is at 1.7%. The market has assessed the risk of default of this company as being less than a U.S. Treasury bond. There will probably be 8%-9% cash flow growth over the next 5 years. Dividend yield of 3.76%.

Probably has a little better pipeline coming then Pfizer (PFE-N), so may be a little bit better growth. Still very modest growth for a great company but not cheap enough to buy it here when you can get companies with good yields and good growth at reasonable prices.

(Market Call Minute.) Likes the group in general.

Pharma have been one of the best performing sectors last year. Good focus. Going forward, their issue is the large drugs going off patent. He does not see the potential going forward. He prefers diagnostics or nutritionals.

(Market Cal Minute) $57.78, 51% upside.

Had a whole lot of problems with patent expiration. Now they have had their big patent expirations out of the way. Doesn’t know what is going to happen in the next couple of months.

(Market Call Minute.) Ranks very well. Nice and safe dividend of 3.8%.

Trading at about 12X earnings which is not really expensive. Has over 3% dividend. The problem is that most people don’t expect the earnings to grow and are actually going to decline over the next few years. Would prefer Abbot Labs (ABT-N) or Teva Pharmaceuticals (TEVA-N).

Chart shows a long, long sideways market followed by an outstanding pop. Chart is showing a parabolic move but the trend is up. Typically when a stock moves quite a bit off a trend line, be prepared that it could return to the trend line. If you are a longer-term investor, stay with the story as long as it doesn’t break the trend line.

US health care valuations are very, very attractive. They have reasonable PE’s and good dividends. This is all about the 3.8% dividend. He would prefer something with a cheaper valuation and better dividend growth.