Pfizer Inc (PFE)

This is a stock that has been a huge disappointment for every value investor for a very long time. It has had a very decent performance over the last year as the worries about patent expiries has died away somewhat. Pharmas as a whole have been a very disappointing group. This is still well below what it was 10 years ago. You get a decent dividend yield. You might consider buying the pharmaceuticals ETFs, which gives you a basket and you are not exposed to any one company.

What would you think about moving profits from this company into Microsoft (MSFT-Q)? Microsoft had a few downgrades as some of the PC numbers that came out were very dour. We should be very careful with PC companies and anything associated with them. However, he hasn’t been a fan of pharmaceuticals for some time. He sees a leaky boat that is leaking a little less than it was. A year ago, $36 billion of patented product went generic and about $18 billion this year. Lost 71% off their Lipitor product. Doing a good job with bringing on new drugs but earnings are coming from cost cutting.

Very reasonable multiple but not a whole lot of growth and earnings. Has come up as people have looked for dividend income. Pays a nice yield but he doesn’t see a whole lot of upside potential, particularly from these levels.

He is overweight healthcare in his portfolios and it is all non-Canadian. This is his main pharmaceutical name. Likes the restructuring that they have done. Have restructured and merged with Wyatt and consolidated down to what they wanted to be. Recently spun out their animal health division, which proved to be very good.

Up 27%, not including dividends in the last year. Decent and safe yield of 3.4%. Feels it has moved up because there could be additional spinoffs and activity in the company. Not a growth company at this point. At some time he could see himself rotating out of this to find more cyclical names or more economically sensitive names but for now he will continue to hold.

Great trend. A lot of places to have support. Just this month it broke out on a monthly basis. So it says we are into a very large long-term move. A long term hold.

Has done well. Good dividend as people search for yield. A huge percentage of drugs are going off patent over the next few years. In their case, Lipitor has gone off. You see quarterly drops in Lipitor revenues of 30-50%. Drugs going off patents will be dropping and the market will anticipate that. He looks for things that have a little more of a leadership role. He is a GARP investor. PFE does not qualify for his approach to investing.

On the longer-term perspective, all the drug makers are moving. Expects a secular out-performance for the next 5-10 years. Great dividend. Fantastic low beta and positive demographics.

(Market Call Minute) Prefers JNJ-N, because they have other businesses than Pharma that help support the stock when Pharma is poor.

The big struggle here has been growing revenue. Have grown profits through cost cutting. A few years ago did a huge merger which was really just a cost-cutting exercise. Unfortunately, the way US legislation is designed, when these drugs go off patent they lose a lot of share. Investors are being lured in by the dividend and what they view as a stable company. Be very careful.

If there is a recession, drug companies will tend to do well. They are defensive plays. This one has a reasonably decent pipeline. Pretty good, strong balance sheet and will be able to keep the dividend and possibly increase it over time.

Breaking the company up and making it a little bit smaller so the drug discovery has more impact on the story. Good balance sheet. 3.4% dividend.

All the drugs stocks are now moving. His model price is $29.77 giving it a 17.5% upside. 3.5% dividend yield.

(Top Pick Sept. 23/11, Up 47.13%)

Most of the patent expirations have already occurred and there are no significant ones in the near-term. Good dividend. Defensive business model. In the process of spinning off some assets. Very low expectations for the business development and pipeline so should there be any success in those areas, you should see the stock continue to work. 3.7% dividend.