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JimVanMeerten (67.33)

Merck is serious about growth

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May 18, 2011 – Comments (1) | RELATED TICKERS: MRK

If you're looking for an A+ financial strength company that pays a 4.60% dividend and is dedicated to growth you need look no farther than Merck (MRK).  I actually found Merck while screening onBarchart for the S&P 500 stocks hitting the most frequent new highs in the last month and was excited to see the recent price appreciation.  I was also excited by the fact that their R&D budget was 25% of sales -- can you find another company that is plowing back that kind of money into growth?  They are looking to the Chinese consumer to buy their new drugs. Let's look at the price momentum of 17 new highs and up 9.58% in the last month.


Merck & Co., Inc. (MRK) is 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.

Factors you should consider:

1 - Technical Factors:96% Barchart technical buy signal

2 - Trend Spotter buy signal

3 - Above its 20, 50 and 100 day moving averages

4 - 17 new highs and up 9.58% in the last month

5 - Relative Strength Index 73.94% and rising

6 - Trades around 37.26 with a 50 day moving average of 34.21

Fundamental Factors:

1 - Core holding at most Wall Street brokerage firms

2 - Analysts have released 6 strong buy, 11 buy and 7 hold recommendations with no negative reports

3 - Sales are expected to increase by 2.60% this year and contract by 1.30% next year

4 - Earnings projection are for increase of 9.10% this year, followed by another 2.90% next year and continue by 3.98% annually for the next 5 years

5 - Pays a 4.60% dividend while you wait for the price appreciation

General Investor Sentiment:

1 - Very popular stock on Motley Fool with over 3,600 readers expressing an opinion

2 - CAPS members vote 2,679 to 201 for the stock to beat the market

3 - The more experienced All Stars agree with a vote of 689 to 37

Summary:  Investors that want a company that pays a steady dividend, reinvests 25% of sales back into the discovery and development of new products and is looking to expand in China then add Merck (MRK) to your watch lists.

1 Comments – Post Your Own

#1) On May 18, 2011 at 1:12 PM, ikkyu2 (99.36) wrote:

As a doc, I put patients first; as a shareholder, I want a drug company that puts patents first.  Merck's last introductions have been dogs - take Zetia, a drug that reduces cholesterol but increases heart attacks and strokes - and I don't see that it has anything like, say, a Zocor, in its pipeline.

As a doc who got out of academe a few years ago, I have harbored suspicion that our national pharma-academic translational research program - the one that feeds the pipelines - may be broken.  I think Merck may have all those good numbers that you're talking about now, but it may well be a value trap as well.

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