Pfizer Inc (PFE)

Not a fan. Once they started to lose Lipitor off patent, they started to scramble with acquisitions to try to diversify their base. They haven’t come up with any huge blockbusters, and for the most part it has just been a struggling stock. They don’t generate continuing free cash flow, and the growth rate is only 2%-3%, and inflation is going to wipe that out.

Has a small position, and feels it is best of breed in the medical space. One thing he is concerned about, and why it is down today, is when Donald Trump tweets about healthcare. The volatility is there, but it is very, very cheap, and the franchise value is very strong and he likes this long-term.

This has suffered like other pharmaceutical companies from the perception that there is going to be a lot of pricing pressure and a lot of negative sentiment. With the recent change in the US, and the Trump administration poised to have a more supportive regulatory environment, this is a pretty interesting opportunity. Trading at 13X forward earnings with a dividend yield of 3.8%.

(Market Call Minute.) The Pharmas have had a little bounce, but really haven’t followed through at this point. He would have expected healthcare to be better.

It has been by far the worst industry so far this year. Clinton would have created a shift in drug pricing. There should be some relief with Trump. Very likely you will get really good tax relief in the US. It looks good here.

He is a little underweight in healthcare and wants to build that side of the portfolio, because he thinks it will benefit under a Trump administration. This one wouldn’t be at the top of his list, because their pipeline of drugs is quite boring and underwhelming. He is not expecting a ton of growth. Dividend yield of about 3.8%, which is about the only positive thing he can say. Prefers other names.

(Almost one of his Top Picks today.) This has come off along with the other pharmas. It has a great pipeline and it will continue to buy other stocks. The stock sold off because there was talk it would split itself into 2 different companies. For now, they’ve decided to keep it together, and he thinks that has hurt the stock. They have a good pipeline, and have just bought another company to help build up their pipeline. Once the election results are over and we have a better idea of what is going to happen, this is a stock you are going to want to own. The Pharma stocks are not going up right away; this is for long-term investors.

In drug stocks, downsides can be fairly severe, but in large integrated drug stocks like this, perhaps less so. This company always has a pipeline of drugs in the system. He doesn’t see a lot of downside from here, but given the industry it is in, a move of 15%-20% is not unusual. You have to have a high tolerance for volatility.

(Sell?) There is a lot of pressure on pharma right now as well as some of the biotech companies. He wouldn’t disagree to making this kind of a move.

Sell before election? All the health care names have been under the threat of Hillary getting in. PFE-N sold off some non-core assets. She has chosen JNJ-N.

He likes this stock. It is attractively valued and ranks reasonably well in its pipeline. It makes sense if you are going to own it in a broader portfolio, especially if you are looking for some income.

In the spring, this company was going to merge with Allergan (AGN-N) and do a tax inversion deal. The stock price had been pushed up on that. The US government collapsed the deal, so the stock pulled back. They used their cash to make 3 or 4 smaller acquisitions. They really don’t have a home run product that is coming out in the market. It has a nice dividend yield of around 3.6%. His target price is $44. The company is really well run and will make acquisitions, and just grind higher.

Another stock that has been recently pulling back, but a fabulous long term stock. It was moving higher when other stocks were not. A great long term holding (3 years plus).

There are concerns around the US election, and what that could mean for the drug pricing model. Pharmaceutical companies have had an ability to raise prices over the last few years. This stock made a high in July at about $37, and has now pulled back to $34. He likes this company as it has great dividend growth. 3.5% dividend yield. As we go through Oct/Nov, there is going to be clarity on the US election and what the implications are. Thinks the market is discounting some uncertainty at the moment.

(Market Call Minute) Suffering like all pharma companies.