Teva Pharmaceutical (TEVA)

One of the generic companies that focuses on the top of the market. They tend to have the newer generics. The bad news is that they are selling in the US to 3 joint ventures. The wholesalers and retailers got together to form joint ventures which controls 80% of generics, so they get much lower selling prices. The trick is to be very efficient in manufacturing, to be able to meet the bids as well as being early in launching drugs that have just gone off patent. A tougher game to play than it used to be. Operationally, the company historically has been very good. It has sold off, and is reasonably attractive.

Technically, this does not look good. The chart shows it is in a distinct downward trend, and recently broke a key support level. Also, it is still underperforming the market. All the indicators are trending to the downside.

This was weak and it disappointed the street. A good, blue-chip quality generic name, that you want to buy when it gets really cheap. Looking at the chart, it has gotten really cheap again. Trading at about 7X with an 8% growth rate.

This was close to $70 a share, and currently is at about $34 a share. It could earn $4-$5 in the next 12 months, a very attractive valuation. 60% of their business is generics, and they are the market leader. About half their revenue is coming from emerging markets, and that has to be a growth area. Just acquired about a $30 billion portfolio of generics from Allergan. Dividend yield of 4.02%. (Analysts’ price target is $45.50.)

An interesting story. A great Buy at these levels. Trading at about 8X earnings with a nice dividend yield of almost 4%. The largest generic maker globally. They acquired Allergan’s generic business and there are a lot of costs they can take out. Sometimes generics are focused on one drug, but this company is much more diversified across a wide spectrum of pharmaceutical lines. The market is slightly worried about the change of CEOs, as well as a couple of drugs that need to have a new molecule made. Although a generic maker, they also have a pipeline of branded drugs. In the long run, this company will do very, very well.

A generic manufacturer, but do have some branded drugs. The company has been experiencing quite a bit of competition on one of their key branded drugs, so the profit growth is very uncertain, and the share price responded accordingly. There is just not enough clarity going forward.

His data is telling him that this is a tremendous company. ROC for years and years has been 12% or higher. In the last few years, it has been in the 20% range. However, it has not done so great in the last year or so. He would say that this is an opportunity. There are probably some issues in the pipeline that you would want to work through and understand a little better, and that is not his forte.

The stock has gone down because of fears of its patent protection on one of its very big products Copaxon, and he thinks the stock is really undervalued at this time, simply because it trades in about 120 countries globally with generic product. No matter what happens with the American Affordable Care Act, generic pharmaceuticals are the wave of the future, and this company is likely to go back up and claim the highs of a couple of years ago.

Primarily a generic company, but a much more diversified generic company. They have things in respiratory, oncology, women’s health, etc. The stock has fallen off and is trading at about 6X earnings with a free cash flow yield of about 13%. A great dividend yield of almost 4%. This is a strong franchise in generics, and nobody can compete with them. They have some things in the pipeline that are very good, which will come to fruition and help them. Healthcare is the only sector that has underperformed this year because people are worried about overpricing. With their acquisition, there is also a change in management, so there is a little uncertainty. You should do very well with this over the next several years.

Has just got back into the stock after being away for several years. It is the largest generic company globally. He likes buying pharmaceutical stocks when they are out of favour. This has a drug called COPAXON for multiple sclerosis, which is just coming off patent. Acquired Allergan’s generic business, and the integration has had a few rocky times. Looking forward, the valuation is as cheap as it has been in a very long time. Dividend yield of 3.79%. (Analysts’ price target is $52.48.)

This is one where the valuation is very compelling. It’s at a 52-week low, and in this environment, you would think a generic company would do very, very well. At this level it is definitely worth dipping into it. They are expecting 15%-20% growth in emerging markets, and this company will be able to participate.

All the pharmaceuticals have had a pretty rough go. This is one of the stocks that has the ability to turn and run. Their group is out of favour. There hasn’t been any money flowing into the sector for a while, and they are fairly cheap.

(Market Call Minute.) If you have patience, and you don’t mind the stock price, this is a time to step in.

Generics are not his favourite in healthcare. Prefers looking for innovators, and would rather own companies with strong Intellectual Property. He prefers things like Roche, one of the leaders in oncology, Novartis which has a very strong IP in both cardiology and oncology, Shire in orphan drugs where they are the leaders in IP. When you buy a stock like Teva, you have to pick the right time to get in and that is not his style of investing.

It has been caught up in the health care sector decline. Now they are less worried about regulation. But they don’t have a lot of branded drugs that are high priced. He owns some of the TEVA-N debt. He thinks it is a pretty good entry point here even if the chart does not look that good.