Abbott Laboratories (ABT) is a leading healthcare and pharmaceutical company that looks like an ideal investment due to stable revenues, a solid dividend and even some potential upside due to a upcoming spin off. This company has a business that is diversified into three major categories:
1) Pharmaceuticals: Including products for pain care, cardiovascular, renal care, metabolics, anesthesia, neuroscience and others.
2) Medical Products: Including products for animal health, diabetes, vascular, hematology, diagnostics, and more.
3) Nutritional Products: Including products for pediatric nutrition, healthy living and medical nutrition. This range of products includes well-known brands such as: Ensure, Isomil, Pedialyte, Similac and others.
Abbott Laboratories shares were recently hitting new 52-week highs, but the stock has experienced a pullback after the company reported earnings. However, it still appears to be in an uptrend and the stock could bounce back and resume the upward path in the coming days and weeks. Here are 4 reasons why it makes sense to consider this stock now:
1) Since this company manufactures products that are primarily related to healthcare, it is not likely to see a big drop in revenues if times get tough. Even in a recession, consumers will continue to spend on healthcare and cut back on luxury items first. This company also has a very strong balance sheet with about $11 billion in cash and around $18 billion in debt.
2) Abbott shares make sense for income investors as the stock currently yields nearly 3%. It also has a history of dividend increases and it has paid a dividend since 1924.
3) Abbott plans to separate into two publicly-traded companies in the coming months, and this could unlock more shareholder value. Abbott will hold the medical device and consumer brands, and "AbbVie" will be the new company that holds the prescription medicines.
4) The company continues to invest in research and development which could lead to new products and future growth potential. In 2011, it spent about $4.1 billion on R&D. It also recently announced positive data for a potential Hepatitis C treatment. This was a phase 2b study, so it is still early but the Hepatitis market is worth over a billion per year, which means it could have blockbuster drug potential.
Here are some key points for ABT:
Current share price: $65.61
The 52 week range is $52.05 to $72.47
Earnings estimates for 2012: $5.06 per share
Earnings estimates for 2013: $5.39 per share
Annual dividend: $2.04 per share which yields 2.8%
Data is sourced from Yahoo Finance. No guarantees or representations are made. Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.