Novo-Nordisk (NVO)

With diabetes rising worldwide, will this be a successful investment? He does not want to be in the insulin business. The US is about $100 per vial, whereas in Europe it is about half the price. He thinks there is a risk of a Presidential Order that could allow the import of cheaper offshore supply into America.

Technically it has had very touch go. It does not check his boxes. He is concerned about the pharma’s right now.

(A Top Pick August 26, 2016. Up 4.09%). This is a leader in the diabetes space, and that market is growing. The trend is up considerably, especially in emerging market companies. NVO pays a modest dividend, they have a very large market share and a profit margin that is much higher than their competitors because of their scale and size. They can afford to cut prices more aggressively than competitors when they enter new markets. The consumers in emerging markets are price-sensitive so this is an important advantage.

(A Top Pick Jan 27/17. Up 61.37%.) Diabetes unfortunately is a structural growth story. The company has continued to work out well. They raised their dividend. Have about a $4 billion annual share buyback. It generally has more cash than debt. It may be a little ahead of itself, so perhaps wait to Buy in the summer.

Starting moving away from US markets, where all the margin compression on price is coming from. Demand for insulin is going to come out of India and China for the next 25 years. They should be able to continue to grow the business. Margins are so high that they can always generate free cash flow, regardless of where the price of insulin is. If they can get the top line growing, margins are so high they can start to generate free cash flow that will drive the growing dividends over time. For new clients coming in, he is buying a half position only. He wouldn't be an aggressive buyer today.

Has a great lineup of new products coming. They own the insulin market globally, and is the #1 provider in the world, and the leader in technology on insulin. Given the trends of diabetes in the world, that is going to be a growing business. A slower growth health care stock that you can hold and get your 3%-5% dividend yield along with another 5%-10% earnings growth. You’ll do just fine.

This is very involved in treatment for diabetes. Has stayed away because of the pricing of insulin. Insulin prices have increased almost every year sequentially for the last 20 years, which is incredibly difficult to understand, given the strides that have been made in increasing yields in the biotech fermentation process to produce the drug. Every time new entrants come into the industry, they seem to take the same pricing increase every year. In Europe, insulin is sold at a fraction of the price it is sold in the US. The US president could sign an Executive Order at any time, allowing imports of drugs from the European market, which would collapse the profitability of the industry. He doesn't understand the pricing dynamics.

Just came out with 3 new products. We'll probably see oral insulin medication weekly very shortly. They've passed all FDA approvals for cardiovascular problems. Their weight loss product is about 20%, better than Eli Lilly's. This is not just a matter of penetrating US markets as they are starting to sell more and more internationally to the Indian and Chinese markets. There should be room for dividend increase, probably in the 10% range this year.

A Danish company with about $50 billion in market cap. A global leader in diabetes management. As the world got richer, we all got fatter. They recently announced a $5 billion share buyback. They do this in four-month chunks and are in the middle of the 1st splice. They did this last year as well. They are in a growth market. The stock has had a pretty big run. Look at this in the 1st quarter to see if it pulls back, and if it does add it to your portfolio.

(A Top Pick Jan 27/17. Up 37%.) It helps diabetes and is the #1 diabetes company globally. They’ve added an $800 million buyback, which will be completed by the end of October. They’ve also had a number of interesting announcements on the pipeline side. Good strong balance sheet.

Has 4 new products coming out that are all potentially blockbusters, especially the semaglutide, because it means glucose control, weight loss for the diabetics. Recommends half positions for the Top Picks, which is what he does for new clients. Dividend yield of 1.9%. (Analysts’ price target is $50.20.)

Trading substantially higher prior to the Trump bump, which effectively was very negative to healthcare. Fundamentally, its pipeline is quite good, with a number of announcements coming through. They are doing a $2 billion Cdn share buyback. The dividend is sustainable, and the balance sheet is very strong. You could add to your holdings.

(Market Call Minute) We are a seeing a turnaround.

One of the leaders in diabetic drugs. A very consistent ROE. One of the rare high ROE companies that have a healthy dividend, just north of 3%. One problem he has with companies that produce pharmaceuticals, is that they almost always have to be having blockbuster drugs. This is probably a reasonable time to buy this.

(A Top Pick June 7/16. Down 25.31%.) A perfect example for these 3 past Top Picks to be able to take advantage in the fall, for buying more of them to dollar cost average. Year-to-date this is up 10%, because sales to the US pretty much got chopped in half, and that is really on the pricing of insulin. They have 3 new products where they have already got FDA approval and are waiting for 2 more to come out. They are now starting to sell better into China and Japan, getting them away from the US market.