Pharmaceutical investments to purchase during the COVID-19 crisis include two traditional industry giants and an exchange-traded fund (ETF) that offers exposure to stocks that are pursuing vaccines to fend off the novel coronavirus.
Three pharmaceutical investments to purchase amid the COVID-19 crisis avoid focusing solely on the top contenders for developing vaccines to protect against the dreaded virus, since many such stocks have soared in price already. However, an exchange-traded fund (ETF) offers exposure to promising vaccine producers as they conduct testing that may result in obtaining approval from the Food and Drug Administration (FDA).
Bristol Myers Squibb Earns Place Among Pharmaceutical Investments to Purchase During COVID-19
Bob Carlson, leader of the Retirement Watch investment newsletter, said he strongly recommends Bristol Myers Squibb (NYSE:BMY). He first advised buying the stock on June 29 and it since has risen $57.80 to $62.51, while also paying a $0.45 per share dividend on July 2.
Carlson, chairman of the Board of Trustees of Virginia’s Fairfax County Employees’ Retirement System with more than $4 billion in assets, said Bristol Myers Squibb incurred some recent challenges, such as the loss of patents. The company also took on hefty debt last year to acquire Celgene in a $74 billion transaction.
The debt hurt Bristol Myers Squibb’s share price and caused it to sellat a substantial discount to its value. However, income investors will appreciate that Bristol Myers Squibb pays a “high dividend yield” of around 2.9% that appears safe, even after the debt payments from the Celgene deal are taken into account, Carlson said.
“S&P continued to give the company’s debt an A+ rating after the deal,” Carlson said. “The company is selling other assets and reducing expenses to increase cash flow. BMY made deleveraging and improving its balance sheet a priority.”
Debt from Celgene Acquisition Factors into Pharmaceutical Investments to Purchase During COVID-19
Carlson, who seeks to protect the money of investors and likes to invest in equities that pay dividends, said BristolMyers Squibb has a tradition of managing mergers and acquisitions well, so it likely will attain the cost savings and benefits it projects from the Celgene purchase. Plus, BristolMyers Squibb has a “good portfolio of profitable drugs and a solid pipeline” of others, Carlson added.
The company has at least maintained its dividend for more than 35 years and increased it in each of the last 13 years. Key risks to buying BristolMyers Squibb are that it might not execute its merger plan well and it may stay burdened with debt from the Celgene deal, Carlson continued.
“The risk has a low probability of being realized given the company’s history of successfully executing mergers,” Carlson said.
Chart courtesy of www.stockcharts.com
Analyzing Pharmaceutical Investments to Purchase During COVID-19 Crisis
The trailing 12-month price-to-earnings (P/E) ratio of BristolMyers Squibbis 10.87 times earnings, compared to the Medical — Biomedical and Genetics industry’s ratio of 25.78 times earnings, according to Zacks. Thus, BristolMyers Squibb trades at a big discount compared to its industry peers while it attempts to combine with Celgene.
BristolMyers Squibb announced on Aug. 24 that it entered an agreement to acquire privately held Forbius, a clinical-stage protein engineering company that designs and develops biotherapeutics for the treatment of cancer and fibrotic diseases to add a TGF-beta asset. On Aug. 17, Bristol Myers Squibb reported an exclusive global license for Dragonfly’s interleukin-12 (IL-12) investigational immunotherapy program intended to achieve potent anti-tumor efficacy for patients with advanced stages of cancer. That alliance still requires regulatory clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
Pension fund Chairman Bob Carlson answers questions from Paul Dykewicz in an interview before social distancing became the norm after the outbreak of COVID-19.
Pfizer Is One of the Pharmaceutical Investments to PurchaseDuring the COVID-19 Crisis
Pfizer Inc (NYSE:PFE), a New York City-based multinational pharmaceutical company, offers a 3.99% dividend yield and trades at a P/E ratio of 14.99. That P/E ratio is higher than Bristol Myers Squibb’s P/E ratio but much lower than the 25.78 times earnings of the Medical – Biomedical and Genetics industry.
Pfizer’s size poses a challenge in achieving more than modest growth but it has financial resources needed to partner with other pharmaceutical developers. One recent example of such a partnership involves Mainz, Germany-based BioNTech.
Chart courtesy of www.stockcharts.com
Mark Skousen, PhD, a Presidential fellow in economics at Chapman University who also leads the Forecasts & Strategies investment newsletter, features Pfizer among his five favorite Dow Jones stocks that have the lowest price among the index’s 10 highest-yielding equities. Skousen revises the list each year in the August issue of his newsletter. Since the financial crisis of 2008, his Flying Five stocks beat the Dow 30 Industrial Stock Index (DJIA) annually until this year.
Between August 2019 and July 2020, the Flying Five lost an average of 3%, compared to the Dow Jones Industrial Average’s 2%-plus gain. Skousen, who also leads the Home Run Trader, Five Star Trader,TNT Trader and Fast Money Alert advisory services, observed a pattern that during a crisis, such as in 2008-09 and 2019-20, the Flying Five strategy underperforms the DJIA. But when Wall Street returns to normal, the strategy beats the market and typically does so significantly.
Mark Skousen, a descendent of Benjamin Franklin, meets with Paul Dykewicz.
Kramer Picks Pharmaceutical Investments to Purchase During the COVID-19 Crisis
Pfizer also is liked by Hilary Kramer, host of a national radio program called “Millionaire Maker” and leader of the GameChangers and Value Authority advisory services. The stock’s dividend yield givesincome investors a place to put a portion of their money to earn a much higher returns than the low rates that banks pay depositors.
Capital appreciation of 6% annually would give investors in Pfizer a pre-tax return of roughly 10%. Faster-growing pharmaceutical stocks potentially can provide superior returns, but they also carry additional risk.
Kramer dismisses the idea of buying shares in pharmaceutical stocks that already have jumped in price due to investors bidding up those shares in hopes of finding the ultimate winners in the race to market effective COVID-19 vaccines both domestically and internationally.
Columnist and author Paul Dykewicz interviews money manager Hilary Kramer, whose premium advisory services include 2-Day Trader, IPO Edge, Turbo Trader,High Octane Trader and Inner Circle.
ETF Is One of the Pharmaceutical Equities to Purchase During the COVID-19 Crisis
Jim Woods, editor of Successful Investing, Intelligence Reportand Bullseye Stock Trader, said two major catalysts to lift stocks would be 1) The passing of a substantive stimulus deal by Congress, and 2) A game-changing vaccine/therapeutic to combat coronavirus. The NASDAQ Composite and the S&P 500 already have “extricated” themselves from the shortest bear market in history, recovering from roughly a 30% plunge.
A danger for investors would be that a substantive new stimulus bill of about $1.5 trillion does not gain Congressional passage or that the much-needed vaccine/therapeutic treatment is not developed as quickly as hoped, despite President Trump’s “warp-speed” project aimed at producing the desired results in record time with an expedited regulatory review.
Woods expressed concern that the process of creating, distributing and administering pharmaceuticals that can conquer a deadly problem such as COVID-19 is complex and “fraught with obstacles.”
Paul Dykewicz meets with Jim Woods before COVID-19 to discuss investment opportunities.
As the U.S. economy continues to reopen, stocks keep rising, Woods said. To seize among that momentum and gain exposure to promising drug company stocks, Woods recently recommended an exchange-traded fund, VanEck Pharmaceutical ETF (NASDAQ:PPH), in both his Successful Investing and Intelligence Reportinvestment newsletters. The ETF went into the Successful InvestingGrowth Portfolio, but he also placed it in his Intelligence Reportservice’s Tactical Trends Portfolio. The fund offers a trailing 12-month dividend yield of 1.64%.
Chart courtesy of www.stockcharts.com
Selected pharmaceutical stocks have the potential to rise significantly due to the urgent need for solutions to many serious health problems that include COVID-19, which Johns Hopkins University reports has caused 24,452,629 cases and 830,518 deaths worldwide, along with 5,867,785 cases and 180,824 lives lost in the United States, as of Aug. 28. America has endured the most COVID-19 cases and deaths of any country, including China, where COVID-19 first surfaced.
The pharmaceutical investments to buy amid the COVID-19 crisis each offer promising potential. Investors who want exposure to the industry may find any or all these pharmaceutical investments to purchase during the COVID-19 crisis worth adding to their personal portfolios to benefit from the development of cutting-edge treatments.
Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce,Seeking Alpha, GuruFocus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The book is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others.
