Tuesday, July 19, 2011

"Nobody thinks about being sick in the summertime, so you can get a good buy right now on Amgen, Novartis and Gilead Sciences"

Dow Jones Industrial Average 12,480 (Down) week ending 07-15-2011

7-19-2011 - Back to looking at good fundamentals this week. The markets gyrations both up and down have everyone in a twist about buying stocks that are not of the best quality. It looks like all boats are floating up. Don't fall into this trap. The summertime always seems to give an opportunity for buying some good quality Pharma stocks at a reasonable price.

     Amgen Inc. (Symbol AMGN, $55.27), with a PE of 10.82 and 5 year earnings growth rate of 13.3% over the last 5 years would be one of these quality stocks. Amgen will have 2011 earnings of $5.05 per share and 2012 earnings of  $5.49. The stock is actually even for the last 12 months, so has not added any premium to reflect the improving added earnings.  There is no "hot" money in here right now, so you don't have to worry about a sharp sell off. I would buy the stock here. 

 Novartis (Symbol NVS, $62.17) is the second stock that I would like to mention. It pays a $2.00 dividend so you start out with a $3.29 yield. The One year Total Return on the stock is 28.9%.  2012 earnings are looking like $5.76 per share. A little more aggressive purchase than Amgen , but very solid choice. PE on the stock is 11.08, so is very reasonable.

Gilead Sciences, Inc. (Symbol GILD, $41.70) is the third stock that looks good in the summertime. Again a palatable forward PE of 10.85 , so no overpaying here. 2011 earnings of $3.76 and 2012 earnings of $4.31 looks promising going forward.  Gilead has a fabulous 5 year revenue growth rate of 27%. They have some of the highest net profit margins in the industry at a lofty 34.6 %. No dividend here, but a 12 month total return  of 22.5% with not a lot of volatility. GILD will make a nice building block for your portfolio.

Mokie relaxing in cap.
 So stay relaxed with all this market turmoil and
don't go chasing things like gold or speculating on stocks that have run up wildly.

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