Top Seven Global HealthCare Stocks

Investors are attracted to HealthCare stocks during recessions as these healthcare companies perform better when compared to other companies in other industries. For example in 2008, the S&P 500 Index was down 38.49% but the healthcare components in the index were off only 24.48%. Consumer staples was the best performing group with a negative return of 17.66%.

Among the stocks in this sector, it is advantageous to invest in large firms that have a diversified portfolio of products and a presence in many countries. In order to identify such companies I selected the Dow Jones Global Titans 50 Index. This index components are selected based on free-float market capitalization, sales/revenue and net profit. It is composed of the most established blue-chip companies from around the world. Out of the seven healthcare components in this index, four are US-based. The following is a brief overview of these seven companies:

1.Abbott Laboratories (ABT) is a global health company with 68,000 employees and has been in business for over 120 years.In 2007, total sales was $25.9 B. Abbott operates in three divisions: Pharmaceuticals,Medical Products and Nutritional Products. Some of Abbott’s brands include Ensure, Pedialyte, Similac, etc. ABT pays a dividend of 2.7% and the P/E is 18.33. Last year, “the United States Food and Drug Administration (FDA) approved the Company’s SIMCOR (Niaspan/simvastatin), a medicine for cholesterol management.”

2.The UK-based GlaxoSmithKline PLC (GSK) sells its products in over 140 countries. In the Pharmaceutical segment, GSK’s brands include Avandia, Paxil, Zantac, etc. and in Consumer Healthcare some of its brands are Aquafresh, Eno, Nicorette. In 2007, total revenues exceeded $30B. The current yield is 5.10%.

3. Johnson& Johnson (JNJ) markets a wide range of products such a Acuvue, Neuragena, Listerine, Band-Aid, Tylenol, etc. Total Revenue in 2007 was $64.5B. Annual EPS growth is about 11%. JNJ is a solid long-term classic growth stock with an incredible ability to weather any kind of market.

4. New-Jersey based Merck & Co Inc(MRK) has manufacturing operations in 25 countries. Total sales in 2007 was $24.2 B. Some of Merck’s popular products are Singulair, Vytorin, etc. MRK’s current yield is 5.0%. In the past 12 months, while peer companies have increased earnings Merck saw earnings decline.

5. Pfizer Inc(PFE) is “the world’s largest research-based biomedical and pharmaceutical company” with headquarters in New York. Revenues in 2007 was $48.4 B. Some of Pfizer’s key products include Aricept, Detrol, Viagra,Lipitor, etc. The annual EPS growth in the last 5 years has been negative but currently the yield is 7.23%.

6.Switzerland-based Novartis AG (NVS) operates in three divisions: Pharmaceuticals, Vaccines and Diagnostics and Consumer Health. Novartis had $42.B in revenues in 2007.Earnings have growth at 12.5% annually and the stock pays a dividend of 3.09%. Novartis portfolio of products include Lamisil, Gleevac, Exedrin, Gas-X, Maalox, etc.

7. Roche Holding Ltd is traded in the OTC market with ticker RHHBY. Roche also based in Switzerland.In 2007, sales totalled $41.3 B. On Dec 19th, Roche announced the following changes to its ADR program:

  • Changed Depository Bank to JP Morgan from Bank of New York Mellon.
  • Upgraded to the OTCQX trading platform.
  • Changed Ratio to 1 ADR = 1/4 Non-voting share. Earlier 1 ADR represented 1/2 of non-voting share.

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