An increasingly dark tone is starting to settle on the market. Slowing domestic job growth including Friday's anemic jobs report and two critical elections in Europe over the weekend should make for an interesting Monday. I think it is time to get defensive for a while until we get better domestic economic signals and/or some progress in Europe. One stock I like for turbulent times is Teva Pharmaceuticals (NYSE:TEVA).
Possible catalysts for TEVA:
- Consensus earnings estimates for FY2012 and FY2013 have ticked up over the last two months.
- The company reports earnings on Wednesday. Estimates for the quarter have come down a few cents over the past three months. This should make it easier for the company to best consensus estimates, which it has done the last three earnings reports.
- Teva and Mylan (NASDAQ:MYL) recently settle a dispute around the drug Nuvigil and Teva also won a preliminary court victory versus Mylan around Amrix as well.
Teva Pharmaceutical - "Teva Pharmaceutical Industries Limited develops, manufactures, and sells pharmaceutical products worldwide. It offers generic pharmaceutical products in various dosage forms, including tablets, capsules, ointments, creams, liquids, injectables, and inhalants; and provides basic chemical entities, as well as specialized product families, such as sterile products, hormones, narcotics, high-potency drugs, and cytotoxic substances". (Description from Yahoo Finance)
4 additional reasons TEVA is a good defensive play at $44 a share:
- The company provides 1.8% dividend yield, an A- rated balance sheet and the stock has a low beta (.65) as well.
- TEVA has a five year projected PEG of under 1 (.93) and analysts expect sales growth close to 20% in FY2012.
- The stock is cheap and has a forward PE of just over 7 times FY2013 projected earnings. Earnings are expected to march up smartly. The company made $4.97 a share in FY2011. It is projected to earn $5.61 in FY2012 and $6.06 in FY2013.
- The 21 analysts the cover the stock have a median price target of $55 on TEVA. Credit Suisse has an "Outperform" rating and a $53 price target on the stock.
Disclosure: I am long TEVA.