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I want to like the stock of Teva Pharmaceuticals (NYSE:TEVA). It trades at a reasonable multiple of free cash flow and earnings, and has managed to continue growing when other pharmaceutical companies have stumbled. My issue with Teva is that it doesn't return any cash to shareholders except for a token dividend, and is on a perpetual buyout binge.

With the company trading at less than 10 times 2011 estimates, what better use of cash is there than buying back its own stock? Why take the risk of M&A when there is easy money sitting on the table? The stock is cheap enough that I am considering a modest long at current levels. If Teva ever gets serious about returning cash to shareholders, I would be an aggressive buyer of the stock at these levels.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in TEVA over the next 72 hours.

Source: Why I Want to Like Teva