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Strategies & Market Trends : Value Investing
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To: E_K_S who wrote (23259)2/3/2006 9:30:51 PM
From: E_K_S  Read Replies (2) of 78683
 
Added a starter position to my drug stock portfolio in JnJ. JnJ is close to it's 52 week low, has a reasonable PE of 19 and pays close to a 3% dividend. I am also looking at adding LLY if it breaks $55 to the downside. They sell at a comparable PE to JnJ and recently entered into a partnership with Amyln to develop a new type 2 diabiates drub called byetta.

Both drug companies are selling at the low end of their multi year PE range so by accumulating shares at these levels one may be in a position to sell at much higher prices.

The new Medicare prescription plan provides many of the drug companies with a windfall credit as they are no longer required to sell scripts at a discount to the government funded program. This windfall was estimated to be over $10 billion which should now find its way directly to many of these large pharmaceutical companies.

EKS
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