Use access key #2 to skip to page content.

JimVanMeerten (62.86)

5 Pharmas - But caution!

Recs

4

April 26, 2011 – Comments (0) | RELATED TICKERS: JNJ , MRK , NVS

The Large Cap Pharma sector is the fastest rising sector on Barchartwhen screening for the 1 month price change.  The general investing public is very interested in this sector as evidenced by the 25,409 opinions expressed on Motley Fool on the 5 stocks I selected.  Before buying make sure a pharma fits into your asset allocation plan and then please do you own further due diligence.  Read my opinion at the end of this article.  Let's look at these 5.

Merck (MRK) -  a global research-driven pharmaceutical company dedicated to putting patients first. Established in 1891, Merck discovers, develops, manufactures and markets vaccines and medicines to address unmet medical needs. The company devotes extensive efforts to increase access to medicines through far-reaching programs that not only donate Merck medicines but help deliver them to the people who need them. Merck also publishes unbiased health information as a not-for-profit service.


Technical Factors:

1 - 100% Barchart short term technical buy signal

2 - Trend Spotter buy signal

3 - 8 new highs and up 7.43% in the last month

4 - Relative Strength Index is 69.87% and climbing

5 - Trades around 35.60 with a 50 day moving average of 32.84

Fundamental Factors:

1 - Wall Street brokerages have published 6 strong buy, 11 buy and 7 hold recommendations

2 - Sales are expected to increase by 2.20% this year and decline by (1.30%) next year

3 - Earnings are estimated to increase by 7.90% this year, 2.70% next year and 4.90% annually for the next 5 years

General Investor Sentiment:

1 - 3,596 opinions on Motley Fool

2 - CAPS members vote 2,670 to 203 that the stock will beat the market

3 - All Stars agree 681 to 42

Eli Lily (LLY) discovers, develops, manufactures, and sells products in one significant business segment -pharmaceutical products. The company directs its research efforts primarily toward the search for products to diagnose, prevent and treat human diseases. The company also conducts research to find products to treat diseases in animals and to increase the efficiency of animal food production.

Technical Factors:

1 - 100% Barchart overall technical buy signal

2 - Trend Spotter buy signal

3 - 11 new highs and up 6.58% in the last month

4 - Relative Strength Index 71.87% and rising

5 - Trades around 36.66 with a 50 day moving average of 34.94

Fundamental Factors:

1 - Wall Street brokerages have released 1 strong by, 2 buy and 13 hold recommendations

2 - Sales expected to increase by 1.70% this year and decrease by (6.10%) next year

3 - Earnings are expected to decrease by (9.90%) this year, (13.10%) next year and (4.79%) annually for the next 5 years

General Investor Sentiment:

1 - 1,1776 opinions expressed on Motley Fool about this stock

2 - CAPS members vote 1,247 to 89 that the stock will beat the market

3 - The more experienced All Stars agree 420 to 20

Johnson & Johnson (JNJ ) is engaged in the manufacture and sale of a broad range of products in the health care field in many countries of the world. The company's worldwide business is divided into three segments: Consumer; Pharmaceutical; and Professional.

Technical Factors:

1 - 100% Barchart short term technical buy signal

2 - Trend Spotter buy signal

3 - 9 new highs and  up 10.36% in the last month

4 - Relative Strength Index 80.34% and rising

5 - Trades around 65.10 with a 50 day moving average of 60.17

Fundamental Factors:

1 - Wall Street brokerages have published 4 strong buy, 5 buy and 13 hold recommendations to their clients

2 - Sales are expected to increase by 4.40% this year and 4.20% next year

3 - Earnings are expected to increase by 1.70% this year, 6.40% next year and 6.33% annually for the next 5 years

General Investor Sentiment:

1 - One of the most widely followed stocks on Motley Fool with 16,722 readers expressing an opinion

2 - CAPS members vote 13,139 to 488 that the stock will beat the market

3 - The All Stars vote 3,042 to 53 for the same result

Sanofi-Aventis (SNY)  a global pharmaceutical company that contributes to enhance life by providing medicines, vaccines, and integrated health care solutions adapted to local needs and means primarily in Europe and the United States. The company is engaged in the research, development, manufacture and marketing of health care products. Its strategy is built around three priorities to reach its goals and ensure sustainable growth. The priorities are: increasing innovation in Research and Development, adapting Group structures to future challenges and seizing external growth opportunities. Sanofi-Aventis specializes in six therapeutic areas: thrombosis, cardiovascular, metabolic disorders, oncology, central nervous system (CNS) and internal medicine. The Company offers vaccines in five areas: pediatric combination vaccines, influenza vaccines, adult and adolescent booster vaccines, meningitis vaccines, and travel and endemic vaccines. Sanofi-Aventis is headquartered in Paris, France.

Technical Factors:

1 - 96% Barchart overall technical buy signal

2 - Trend Spotter buy signal

3 - 17 new highs and up 12.11% in the last month

4 - Relative strength Index 73.76% and rising

5 - Trades around 38.84 with a 50 day moving average of 35.32

Fundamental Factors:

1 - Wall Street brokerages have released 1 strong buy, 1 buy and 3 hold reports for their brokers to call clients about

2 - Sales are expected to decrease by (.50%) this year, but increase by 4.00% next year

3 - Earnings are expected to increase by 24.80% this year but decrease by (25.90%) next year.  The 5 year EPS projection is a decrease of (2.45%) annually

General Investor Sentiment:

1 - Only 1,282 opinions on Motley Fool

2 - CAPS members vote 899 to 43 that the stock will beat the market

3 - The more experienced All Stars vote in the same direction 332 to 8

Novartis (NVS) is committed to improving health and well-being through innovative products and services. The company aspires to capture and hold a leadership position in all of their businesses with a strong, sustainable performance based on continuous innovation. Their long-term success is founded on meeting the expectations of all our stakeholders - their customers, their people, their shareholders and the communities in which they live and work.

Technical Factors:

1 - 96% Barchart overall technical buy signal

2 - Trend Spotter buy signal

3 - 6 new highs and up 3.37% in the last month

4 - Relative strength Index 62.33% and rising

5 - Trades around 57.64 with a 50 day moving average of 55.19

Fundamental Factors:

1 - Wall Street brokerages have 5 strong buy 1 buy and no hold recommendations

2 - Sales are expected to increase by 13.20% this year and 1.80% next year

3 - Earnings are expected to increase by 3.00% this year, 5.80% next year and 4.65% annually for the next 5 years

General Investor Sentiment

1- 2,033 members have expressed opinions on Motley Fool

2 - CAPS members vote 1,462 to 48 that the stock will beat the market

3 - All Stars agree 516 to 7

I'm sorry but I'm not as high on this sector as everyone else is.  You may ask why?  The technical indicators are positive, Wall Street has buy recommendation out and the general investing public thinks the sector will beat the market.  My view is wishing won't make it so.  

There are too many "IF's" here.  Sales projections in the future are good only "IF" new drugs are discovered.  Profit projections are good only "IF" subsidized medical care is approved.For me to put my money down I need to see all the planets in alignment: growing economy, rising stock market, solid double digit projections of sales and earnings and strong and consistent price momentum.

This sector lacks double digit growth projections and strong and consistent price momentum.  Only traders and stop loss disciplined investors should be in this sector.

Jim Van Meerten is an analyst for  Marketocracy Capital Management.  He shares his knowledge and experience from over 40 years of investing in stocks, mutual funds and ETFs on Barchart.com  in his daily blog -- Barchart Portfolio Blogs.

0 Comments – Post Your Own

Featured Broker Partners


Advertisement