Novo-Nordisk (NVO)

Largest manufacturer of insulin products with margins that double its competitors. In over 180 countries. They have the largest market share in diabetes care as well as the broadest portfolio of diabetes products. He sees significant growth in this space. Diabetes has grown at 11% per year for the last 10 years, and it is projected that by 2035 there will be 2 times the amount of people globally that have diabetes. The fastest growing region for diabetes cases is in the emerging markets. Dividend yield of 1.9%.

Diabetes is the primary driver of the story behind this company. Well-run company, and is dominant in the diabetes field. Diabetes is considered pandemic, so if you are a leader in the production of a product that caters to diabetes, then you should do very well. This is trading at about 25X forward earnings, and the growth rate is probably half that, so it has a PEG ratio of about 2. He typically tries to avoid companies trading at this high a growth rate.

Leading insulin maker globally. Diabetes is supposed to grow by 20% over the next 20 years, especially in countries like India and China. This is a big pool for everybody to do well, in spite of competition coming in. Usually every 5 years, this company will have a big run and then start to fall back as their growth rate begins to decline waiting for that time when they can bring new products to market, which will then be the leading edge. In the last year or so, they have been suffering only from the standpoint that one of the HMO providers has decided not to use their insulin drug. Because of this, their earnings growth has declined to roughly the 10% range, but that could be temporary. News on the weekend indicated that their Liraglutide 3 enzyme is the one injection per day that has proven it will help with weight loss for people who are diabetic. Stock is fully valued so wait for an entry point.

Probably one of the world’s largest oil field service companies. Involved in manufacturing of equipment. Big builder of drilling rigs for the drilling companies. Very diversified in a lot of different markets. This is actually a great long-term play on the growth of the energy industry. If you don’t own, wait for a bit of a back off before stepping in.

Lost an Express Scripts (ESRX-Q) contract for its synthetic insulin medicine because of price. Although that is a headwind, it is not material. Has a very broad base of profits and sells its products throughout North America and Europe. Also likes that manufacturing insulin is almost a craft, which means it is much more resistance to generics in the long-term. Not necessarily cheap at about 20X trailing earnings, but it’s a business that has pretty strong visibility into decent high single digit top line growth and much better operating profit growth for the next few years. Have done a great job of returning cash to shareholders through buybacks and dividend increases.

Largest manufacturer of insulin globally and has been taking share from Eli Lilly (LLY-N) for years. Stock sold off because it had problems getting FDA approval for a new type of diabetes drug that has been approved in Europe and Japan.