Looks like a promising stock to me.
You make a good case.
I’d love to hear more if you or anyone else has a deeper analysis or more insights.
For those who like 'em stodgier, Pfizer also looks pretty good too at $52 and change. (though obviously better at October’s prices of $41 and change, which may return).
If you look a their projections of vaccine profits, there is a chance that the run up in company value considerably exceeds the run up in price.
It’s a much more conservative wager, of course, with a bit more margin of safety and likely a more modest upside.
Single digit multiple of next year’s estimated profit and a dividend yield over 3%. The downside seems somewhat constrained even if the earnings boost starts to fade.
Personally, I have a fondness for Mr Buffett’s old thoughts on medical firms: picking winners is hard, so buy a slate of them.
My personal preference is medical device companies.
An equally weighted portfolio of all the medical device firms covered by Value Line in the last 25 years beat the S&P by a remarkable 7.3%/year.
No other selection criteria.
In the last decade that’s an average of about 60 stocks.
This includes some fairly speculative early-stage companies, so if you want to narrow it down,
I like the ones with the most cash backing up the market cap. Less likely to go pop.
e.g., limiting it to the top 20 by cash-to-market-cap ratio, equally weighted, added another 3%/year.
CAGR 25 year return 20.3%/year after trading costs, beating S&P by 10.6%/year, both with reinvested dividends.
As you can imagine, there is almost no portfolio turnover with either version, though regular
rebalancing helps a whole lot–relatively volatile and uncorrelated individual prices, I guess.
Say, every 2-3 months improves things even after allowing for generous trading costs.
Will this continue to be a winning sector? Maybe not.
But they’ll probably do OK.
Jim