Which company today can stand the test of time? There are plenty of them that have a good chance and this list includes some big drugmakers. These companies can invest billions of dollars into the research and development needed to stay relevant over a long time frame.
But after asking many experts which is best, we think we have one pharma stock that you can dependably buy and keep forever.
Bristol Myers Squibb
Finding companies that can stand difficult times is a hard task. An excellent way to do this is to look at the companies that were around for some time. Pharma company Bristol Myers Squibb fits this bill. This drugmaker’s past dates back to more than 100 years, putting it into a very exclusive group. But the past is not the present, and it is not always proof of what will happen next.
Fortunately, there are plenty of reasons to think Bristol Myers still has a lot of lucrative years ahead of it. Consider the firm’s lineup of drugs, which has no less than eight hit products. That is impressive, and most of these products are still boosting their revenue by as much as double-digit percentages. The firm’s top three products, anticoagulant Eliquis, multiple myeloma treatment Revlimid along with cancer drug Opdivo, boosted their sales by 29%, 11%, and 16% y/y, respectively, during Q2.
It is also worth looking into Bristol Myers’ future pipeline, which has over 50 clinical compounds currently in development along with dozens of continuing clinical trials. Regulatory successes are usually routine for this pharma company. Thanks to their expansions and fresh approvals, it can replenish its drug lineup as patent protection goes away on its older products.
This dynamic guarantees that Bristol Myers will keep growing its earnings and revenues at a good rate. That is great news for its stock, and it will help maintain its healthy dividend record. The firm currently gives a yield of 3.39% — a lot higher than the S&P 500’s yield of 1.38%. Bristol Myers has raised its dividends by 19.5% in the previous three years, and with a well-selected payout ratio around 36.3%, it can afford big dividend increases.
Bristol Myers’ shares are now dirt cheap, trading at only 7.8 times forward earnings, which is better than the average forward p/e ratio of 13.3 for its industry. At these numbers, Bristol Myers looks like the perfect buy. And while there are undoubtedly going to be problems along the way, investors who stick with it and keep the stock for some time will be glad they did.
Author: Blake Ambrose