If ten years ago someone had told you that a United States Senator and presidential candidate [Bob Dole], would be advertising an aphrodisiac for men on television, you would have thought they were crazy. Every evening while watching TV, I see at least one ad, and sometimes several ads, for a pill that treats treats erectile dysfunction, ED. And this is during prime time.
Do you realize that seeing such an ad would have been unheard of just ten years ago? Viagra wasn’t approved for use in the treatment of erectile dysfunction by the Food and Drug Administration until March 27, 1998.
Viagra, which has the chemical name sildenafil citrate, was the first drug approved to treat ED in the United States. It is manufactured by Pfizer Inc. (NYSE:PFE), which manufactures and markets numerous other drugs including Lipitor for elevated cholesterol, Norvasc for hypertension, Zoloft for central nervous system disorders, Celebrex for osteoarthritis, and Zyrtec for allergies.
It is one of the highest paying major pharmaceutical stocks with a yield of 4.3%. It has a P/E of 10.5 and its PEG is 2.5. The latest year over year, quarterly earnings from continuing operations were up over 245%, however, revenues were down over 7%.
Another player in the ED market is the famous aspirin maker Bayer AG (BAY), which produces vardenafil, or which is more commonly known as Levitra. This German stock, which trades on the New York Stock Exchange, has a P/E of 27 and a PEG of 1.6. It pays a small yield of 1.5%.
Last but not least is Cialis, which has the chemical name tadalafil. It is manufactured by Eli Lilly and Company (NYSE:LLY). Cialis is sometimes referred to as the weekend pill because its potency lasts for 36 hours. Lilly has a P/E of 27 and a PEG of 2.3. It pays a dividend yield of 2.9%.
Please note that sales of the above three products make up only a small portion of their company’s total revenue. The stocks can be tracked at Stockpickr.com.
Disclosure: The author owns PFE and BAY.
BAY vs PFE vs LLY 1-yr chart