Pharmaceutical companies are frequently great targets for new stock holdings. The large-cap firms often provide both growth and dividends, making them excellent long-term investments.
While some pharmaceuticals are cutting research and development, Merck (MRK) is increasing its spending in this area. This pharmaceutical giant has a strong drug pipeline and aggressive approach to obtaining FDA approval. The company is also benefiting from lower overhead costs and higher revenue than competitors, after seeing a double-digit stock price gain last year. When compared to competitors, Merck offers a solid dividend and is in optimal position for growth this year. Here, I will look to Merck for our next potential target in the growing pharmaceutical sector.
Merck Showed Strength in 2011
While a number of companies didn’t fare well in 2011, Merck saw its numbers head in a mostly positive direction, as the $115.5 billion company pushed ahead. Riding the success of drugs like its wildly popular hepatitis C medicine, Victrelis, the company hauled in an impressive gross profit of over $31 billion. The company’s stock price climbed over 15%, while its price to earnings ratio (10.14), price to book ratio (2.1), and debt to equity (30.8) all suggest that the company is being well-run. Its $41.25 target price shows high growth potential (10% over the current share price), and when coupled with its $1.68 annual dividend (good for 4.4%), Merck offers a winning combination of growth and dividends to investors.
Making News for the Right Reason
Publicity is great when it goes your way. It can be brutal when it doesn’t. The good news for Merck is that lately, it seems like most of its news is favorable.To continue reading, click here.