We, unfortunately, fall ill and therefore governments ensure that we have hospital insurance covers to reduce our expenses. However, even as we seek to reduce our hospital bills, we can increase our savings by investing in pharmaceutical companies since we know for a fact that medicines will never cease to be on the market. Still, not every company is selling a drug that can make a difference in people’s lives. Therefore, as an investor, how about you consider these top pharmaceutical stocks for adding to your portfolio this year?
1. Eli Lilly & Company (LLY)
Eli Lilly & Company has been an attractive stock since the beginning of the year when Yahoo! Finance gave us a few reasons to consider. Among the reasons was that in the entire 2018, Eli Lilly & Company shares performed better than the large-cap pharma industry with its stock returning 38.5% while the industry’s declined by 2.4%. The introduction of new drugs into the markets are expected to help keep the earnings per share in 2019 to between $5.90 and $6.00. Its decision to acquire Loxo Oncology, Inc. also makes it a strong buy stock considering that cancer drugs are the next big thing in the pharmaceutical industry.
2. Merck & Co., Inc.( MRK)
InvestingDaily terms Merck & Co., Inc. as a money-making machine for anyone looking for a long-term investment. John explains that Merck has a strong track record for its research pipeline and its extended collaboration with NGM Biopharmaceuticals until March 2022 only makes it an even more attractive stock since immunotherapy has become the focus of many pharmaceuticals and NGM is already breaking ground. A closer look at Merck’s balance sheet and the cash flow figures over the past two years are impressive; in 2017 the cash flow was $4.5 billion while in 2018, it had almost doubled to $8.3 billion. The dividend yield is 2.68%, well above the industry average of 1.89%.
3. Johnson & Johnson (JNJ)
In 2016, The Motley Fool still thought that Johnson & Johnson stock was a buy-and-hold stock for investors who were looking to make long term investors. The argument is that the company has been consistently turning in profits and its hold on the healthcare sector is undeniable given its solid history of topnotch products. By then it had grown at a compound annual growth rate of 11% and therefore although Seeking Alpha still agrees that new growth opportunities worthy of a revolutionary impact may not be present now or in future, the company remains to be profitable.
4. AbbVie (ABBV)
AbbVie is the result of Abbott Laboratories (ABT) spinning off its research-based pharmaceutical business to create a biopharmaceutical company, in 2013. According to InvestorPlace, AbbVie’s flagship drug Humira has been on a declining trend with a 15% annual drop with the reasons being that it is facing stiff competition from biosimilars, and the expiration of its patent in the European Union. Further, the expiration of its U.S patent has investors worried that the share price will decline. However, those for who are looking to grow their portfolio, they can reinvest the lucrative dividends that their shares yield.
5. Pfizer (PFE)
By 2016, Pfizer ranked among the largest pharmaceutical companies in the world with estimated sales of $51 billion, according to Kiplinger. However its rise to the top has not been without challenges such as the expiry of its Lipitor drug in 2011. Some of the contributing factors to its success are its production of biosimilars and acquisitions which the CEO Albert Bourla said the company was considering as a growth option since Pfizer’s balance sheet enables them to do so.
6. Bristol-Myers Squibb (BMY)
Bristol-Myers Squibb is a leader in the pharmaceutical industries with its extensive range of medicines for a myriad of ailments and diseases. Its decision to acquire Celgene was met with resistance since its second-largest shareholder, Wellington Management, opposing the move citing that the company could find alternative ways to create value for its shareholders and shareholders would be accepting too much risk since BMY was offering its shares at a price below implied asset value, as Pulse reported. However, with Celgene being a cancer drug maker, it is no surprise that 70% of the shareholders voted for the $74 billion acquisition. Consequently, BMY now can increase its market share in the oncology drugs market.
7. Zoetis Inc. (ZTS)
Pfizer and Eli Lilly are rivals and they took their rivalry a notch higher when both spun off their pharmaceutical companies with Pfizer having Zoetis and Eli Lilly introducing Elanco. The Motley Fool compares the two companies and Zoetis comes out on top in terms of revenue and profits. Zoetis already has a reputation for being the world leader in therapeutic drugs for humans, and by partnering with Regeneron Pharmaceuticals, pain in dogs and cats will be a thing of the past. Pets are members of families, and just like we do anything for our human relatives, the market for such pain-relieving drugs is ripe making Zoetis stock worth buying.
8. Biogen (BIIB)
According to MarketWatch, Biogen is still worth adding to your stock portfolio despite its share price dropping by 28% in March this year to reach $230. The decline was due to the company stopping its clinical trials of Aducanumab, a drug that was supposed to cure Alzheimer’s, after learning it was not working as Stat News explains. However, the company has many other drugs as well as others it is looking to manufacture; since it does not pay dividends but instead buys stock, its future is promising.
9. Vertex Pharmaceuticals (VRTX)
According to Wallet Investor, Vertex Pharmaceuticals is an excellent stock for those looking for long-term investments. Currently, the share price stands at $170.28, but the Wallet Investor predicts that this figure will more than double by April 2024 to reach $373.347. The revenue will also have grown by 119.25%. Matter of fact is investors already think so since as The GV Times reveals, by last month, Vertex stock had risen by 5.37% leading to 90 new institutions weighing their options with the stock while 326 others added it to their existing positions.
10. Novartis (NVS)
In a world that is ever evolving, you can never go wrong with companies that are on the frontline of manufacturing innovative products. One such firm is Novartis, and according to Jim Cramer through CNBC, companies that lead in innovation are worth having in your portfolio. Jim explains that unlike a few years ago when technology firms were the best bet in the market, today investing in innovation is the way to go because investors are assured of profitable returns even when the market is not favorable. Currently, Norvatis is making strides in cancer drugs as well as treatment of heart failure.