Contrarian Call -Look at the Drug Stocks
The healthcare sector has lagged the market in 2010 down about 1.34% compared to the S&P up about 9%. The large cap drug sector has done worse down 4.3%. Investors are drawn to more dynamic growth sectors in 2010: energy, industrials,materials and technology. The reasons for the poor stock performance of major drugs has been widely communicated: fewer new products driving biotech acquisitions, patent expiration of blockbusters, healthcare reform concerns and legal/regulatory issues. With the large cap pharmaceutical companies the sentiment has become bearish enough to start looking for new buys especially for investors looking for relative safety and yield. A call/write strategy can also reduce risk. Three good stocks to consider for now would be Abbott(ABT $47.47),Bristol Myers(BMY $25.82) and Novartis (NVS $54.73).
| Company | Ticker | Price | YTD | MCAP | PE | Yield | 2011 Est |
| 2-Dec | % Ret | $B | % | % RevGr | |||
| Abbott | ABT | 47.5 | -12.1 | 73 | 16 | 3.8 | 8.8 |
| BristolMyers | BMY | 25.8 | 2.34 | 44 | 13 | 5.1 | 4.3 |
| Glaxo SK | GSK | 38.9 | -8 | 99 | 16 | 5.3 | -0.9 |
| JNJ | JNJ | 62.7 | -2.7 | 172 | 13 | 3.5 | 3.5 |
| Merck | MRK | 35.2 | -3.72 | 108 | 13 | 4.4 | -1.4 |
| Novartis | NVS | 54.8 | -3.75 | 125 | 13 | 3.1 | 12.6 |
| Pfizer | PFE | 16.7 | -8.1 | 134 | 22 | 4.4 | -1.7 |
| 10 Yr Tsy | 3% | ||||||