Zoetis Inc (ZTS)

Animal health care involving drugs. Largest producer of medicine in the pet and livestock space. Spun off from Pfizer. Likes it because of minimal generic competition, and a fragmented customer base. A defensive growth name. Yield is 0.6%. (Analysts’ price target is $93.27.)

Was spun out of Pfizer. They make pharma for livestock and pharma for companion animals. The latter is growing faster than the former. They bought out a competitor in diagnostics so they have a stronger share in that area, which is a rapidly growing market. He's done well with it ever since Clinton attacked big pharma. (0.6% dividend) (Analysts' price target: $93.27)

Fabulous stock. He took profits, but still likes this. Valuation has risen, currently at 27x earnings, which is why he exited.

An animal health company that was spun out of Pfizer (PFE-N) in 2013. They have 2 lines of business. 1.) Vaccines and antibiotics for livestock including cattle, swine and poultry, in that order, for about 65% of their revenue. 2.) Antibiotics for companion animals. A great growth profile in emerging markets. Trading at about 25X PE this year, going down to about 20X with about 20% EPS growth. A well-run company. He could see more upside in this.

A very defensible business. Has pricing power on most of its drug portfolio. They have been under levered for a significant period of time.

(Top Pick Oct 30/13, Up 34.92%) This is a spin off from Pfizer and focused on animals. Sales are growing at 3 times industry average because they dominate in market share. 1 of 3 FDA approved drugs are theirs. They are looking to increase their operating efficiencies.

Largest animal healthcare company globally. There are opportunities with their ability to increase their animal companion ability where there is an increasing amount of emerging markets moving to a higher standard of living and higher adoption of companion animals. 0.81% dividend is paltry, but over the course of time he believes this can grow substantially. This has to do with their ability to double their free cash flow of $500 million to over $1 billion inside of 3 years. His target is $37 for 12 months.

(Pfizer (PFE-N) offered to exchange shares for Zoetis (ZTS-N). What do you think? This is Pfizer’s animal nutrition business and they have been streamlining themselves and focusing on their core pharmaceuticals which is probably a positive for them. Doesn’t know too much about this company.