Valeant Pharmaceuticals (VRX.TO)

Struggling with massive amounts of debt, which was acquired when everything was looking great. The problem was, the assets they bought they probably overpaid for by using cheap paper. $30 billion is a lot of debt and he doesn’t know how they overcome it. He doesn’t like bottom fishing.

He would be negative on this. It is a company with a business model of increasing drug prices, by materially high amounts. This has bitten off a lot of debt in order to go on their acquisition binges. If interest rates rise and they need to get financing, it is going to be extremely difficult.

Thinks this is getting beaten down because in their latest quarterly results, they guided that revenues would be down 8% this year. The company has 3 divisions, and in each of them the revenues were down year-over-year. Those 3 divisions have 15 subdivisions, and only 2 of them had revenues go up. The current is still running against this company. They have a huge debt load.

This had a big fall in 2015-2016, and it hasn’t formed a base yet. Don’t be a hero. Wait for a credible rally to develop first.

He was never a fan of this company. It is back into a reasonable PE area. Thinks there are still questions about just how profitable this company can be. The actual corporate plan has changed totally. You should really wait and see how well their new plan is working.

Concordia (CXR-T) or Valeant (VRX-T)? He wouldn’t pick either because whenever you have accounting irregularities, that never gets better, especially in Canada. This sector is under so much heat right now. The US president has really focused in on even legitimate drug companies and there is going to be a lot of scrutiny. doesn’t think either will survive.

If an aggressive investor looking for speculation, this is probably a decent speculation. On the other hand, if you are a more conservative investor, there are too many things that can go wrong. The main problem is the debt load they have. They have a debt to equity ratio of over 7 to 1. It is still making money, but it has a gun to its head with respect to selling some assets to pay down some of that debt. Also, president Trump has a target on the pharmaceutical industry.

This is under a lot of pressure. One of the problems with a company like this is that analysts are using EBITDA, and for companies like this they should be using free cash. Thinks this is what caused a lot of the disaster. Doesn’t see any reason why you need to own this.

(A Top Pick Feb 8/16. Up 84.67%.) Short. (A Pairs trade with Mylan (MYL-Q.)

It has had the crap beat out of it. They have had all kinds of difficulties. He is always very wary of stocks that keep going up just because they are taking over other companies. This is what hit this one. He is not considering it at this point in time.

He avoided it throughout. He would get rid of it because of the tremendous debt on the balance sheet. If they divested and reduced debt then he might be interested. He would hang on if you can handle the downside.

This is going to continue to be problematic, not only because of its own financial situation, but also certain environmentalists. There is a possibility it could be acquired, which would be a plus. He does not favour the stock. (See Top Picks.)

This does not have a period of seasonal strength. The technicals do not look good. It recently broke down through support once again. When you have a stock that is underperforming the market and is in a downward trend, you don’t want to be there.

The one saving grace about this is that it does finally seem to be forming a bottom after a long, long downward trend. However, it is still not outperforming the market, so not a good situation. Wait until it performs a decent base building pattern, and then consider it.

He is not nearly brave enough to buy this stock. There is $30 billion of debt. They are still under political pressure. There are 2 new challenges. They make a drug to treat lead poisoning, and the crisis in Flint Michigan has brought this drug to the attention of the US Congress, where there are probably going to be hearings about them gouging on this drug. Secondly, if Hillary Clinton does get elected, drug companies in general are going to be meeting with a new sheriff in town, and this company still has enormously high priced drugs, and will come under considerable pressure.