As the market continues to gyrate, some healthcare stocks look like bargains given their defensive characteristics and low valuations. Two stocks that look like bargains here are Amgen and Pfizer.
Amgen (AMGN) – “Amgen Inc., a biotechnology medicines company, discovers, develops, manufactures, and markets human therapeutics based on advances in cellular and molecular biology for grievous illnesses primarily in the United States, Europe, and Canada. The company markets recombinant protein therapeutics in supportive cancer care, nephrology, and inflammation.” (Business Description from Yahoo Finance)
8 Reasons Amgen is a bargain at $57 a share:
1. AMGN is selling at the bottom of its five year valuation range based on P/E, P/S, P/B and P/CF.
2. Amgen has an A+ rated balance sheet, a dividend of 2% and a low beta (.46) of a defensive stock.
3. Amgen has beat earnings estimates the last six straight quarters. The average beat over analysts’ estimates is 6%
4. AMGN sells for less than 9 times operating cash flow and has over $6 a share in net cash on its books.
5. The median analyst price target on AMGN is $66 and S&P’s price target is $68.
8 Reasons to buy Pfizer at $18 a share:
2. PFE is selling near the bottom of its five year valuation range based on P/S, P/B and P/CF.
3. Pfizer has an AA rated balance sheet, a 4.4% dividend yield and a low beta of .70
4. Pfizer has beat earnings estimates for six straight quarters. Its average beat has been over 6% over analysts’ EPS estimates.
5. The median analyst price target on PFE is $23 and Credit Suisse’s price target is also $23.
Disclosure: I am long PFE.