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Strategies & Market Trends : A.I.M Users Group Bulletin Board -- Ignore unavailable to you. Want to Upgrade?

To: OldAIMGuy who wrote (8181)	8/12/1999 3:20:00 PM
From: JZGalt	Read Replies (2) \| Respond to of 18928

Tom, Nice to see the drugs bouncing back. I'm getting tired of bleeding money in that group. I have 15% of my portfolio in MRK and ELN. Just last night I mentioned to my wife that Merck was trading near November 1998 price range. Merck will earn $2.64 estimated over next 12 months. Typical p/e of MRK over last 2 1/2 years = 27 which would put "fair value" at $71, but when you take a look at the 2 1/2 year chart on lower p/e in MRK it is somewhere around 22. With a current p/e based on next years estimates of 23.8, I'd say we are either darn close to a bottom ($55-$57) on MRK or the paradigm has shifted to a point where MRK can no longer demand a premium to it's growth rate. I'm fairly sure the rest of the drug group is also undervalued at this point. For those of you who cringe at online brokerage stocks, these seem to be nice safe investments over the next few years. ---- Dave