|
|
|
|
It
Pays to Seek Shelter in this Pharmaceutical
Firm |
Published:
March 24, 2008
Whenever economic uncertainty
roils the markets, investors often turn to the defensive
healthcare sector. After all, people get sick and need medical
treatment regardless of economic conditions, which makes a company like
Abbott Laboratories (NYSE: ABT, $55.66)
somewhat resistant to a downturn.
Abbott is a leading pharmaceutical provider, riding the success
of blockbuster products like Humira -- a drug used to treat
autoimmune disorders such as rheumatoid arthritis and Crohn's
Disease. The firm is also a major supplier of diet shakes and
other nutritional products, as well as diagnostic equipment for
blood banks, hospital labs and other testing and screening
facilities. Finally, the company also manufactures stents and
other instruments to promote vascular health.
Combined, Abbott took in more than $25 billion in revenues from
over 130 different countries last year and generated operating
cash flows in excess of $5 billion. And at the moment, each of
the firm's business segments is carrying its own weight.
Pharmaceutical revenues (which account for over half of the
total) were up nearly +19% last quarter, thanks in large part to
surging sales of Humira (+54%) and HIV drug Kaletra (+25%).
Meanwhile, the release of Abbott's new Xience drug-eluting stent
pushed international sales in the vascular division up +34%.
Finally, diagnostic equipment and nutritional products (which
include popular children's brands like Pedialyte and Similac)
both registered sharp double-digit gains as well.
Looking ahead, all but one of Abbott's drugs will enjoy patent
protection throughout 2008, and there are plenty of potential
growth drivers on the horizon. For example, Humira has just been
approved to treat psoriasis (which afflicts 125 million people
globally), and sales of that one drug could reach $4 billion
this year. And with a huge research and development (R&D) budget
of $2.3 billion annually, the company has a number of other
promising drugs in the late stages of clinical trials.
Overall, Abbott's well-rounded product line addresses every
stage of the healthcare process, with products ranging from
prevention to diagnosis to treatment. And that balance has
helped push earnings steadily higher over the years, from $1.71
per share in 2001 to an expected $3.20 per share in 2008 (+87%). It's
also worth noting that the firm hasn't missed a dividend payment
for 336 consecutive quarters dating back to 1924 -- and those
distributions have been raised every year for the past three
decades.
And the stock has held up relatively well in the face of a
withering market sell-off. With steadily rising dividend payouts and
a near recession-proof revenue stream, ABT is a solid choice
for defensive income-oriented value investors.
|
Nathan Slaughter
Editor
Half-Priced Stocks, The ETF Authority
|
| To receive
in-depth guidance on today's leading value opportunities every other weekend, plus educational guidance, please subscribe to
Nathan Slaughter & Paul Tracy's premium value investing newsletter --
Half-Priced
Stocks |
|
|
|
Income Security
of the Month
Our "Income Security of the Month" for May 2008 invests in
a fast-growing overseas market that doesn't get much exposure in the
mainstream financial press. And although it typically makes enormous
annual dividend payments -- it has paid an average dividend of 24.5%
per year over the past five years -- this fund is perhaps most
appealing for its total return potential. Specifically, the fund has
delivered total returns of +297.3% since 2003, and
it ranks in the top 10% of its category over the past decade.
|
Top
10 Stocks for 2008!
Since we began publishing this report back in 2003, the picks we've
featured have consistently beaten the broader market -- delivering average
gains of +21.3% per year and outperforming the S&P by a nearly
2-to-1 margin. Act now to reserve your copy of our newest report -- Top
Ten Stocks for 2008. |
|
|
