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I'm Buying Merck At 52-Week Lows


  • It's rare to find high quality names like Merck trading at 52-week lows. Down double digits last week alone, I added to my position.
  • I think the market has overreacted with regard to MRK's recent earnings and negative Keytruda news.
  • I did quite well buying Bristol-Myers last year when Opdivo posted negative results and now I hope to do the same with Keytruda.

It’s funny how the stock market seems to move in cycles. This time last year I was adding heavily to my Bristol-Myers Squibb (BMY) on its Opdivo related weakness. Much of this weakness appeared to be related to fears that competitor Merck’s (NYSE:MRK) immuno-oncology drug, Keytruda, was winning important areas of the market, and therefore, the overall expectations for Opdivo across the broad spectrum of the oncology space were lowered. Well, Ironically, a year later, I find myself buying shares of Merck on weakness regarding its flagship drug, Keytruda, as the market now fears that it won’t quite live up to massive expectations.

I wasn’t very impressed with MRK’s recent earnings report; however, with the stock down 12.7% during the last four trading days, I couldn’t help but feel like I was witnessing an overreaction by the market. I typically like buying into these sorts of opportunities. In the past, I’ve done well buying high quality names into weakness like this. With that said, I have no way of knowing where MRK’s near-term bottom will lie. My recent purchase was at $55.41 and my next target to the downside is in the $50 area. I hope that I don’t end up making 5 purchases of MRK as I average down like I did last year with BMY; however, those BMY trades have paid off nicely now and I’m going to stick with my guns with regard to buying high quality names when I believe they’ve been irrationally discounted by the market.

One thing I like about Merck is that the company has proven itself to be a strong value creator for shareholders over the long term. I understand that looking through the rearview when you’re driving forward isn’t exactly the safest way to do things, but I think the assets and talent

This article was written by

Nicholas Ward profile picture
Maximize your income with the world’s highest-quality dividend investments

University of Virginia, class of 2011 B.A English

Senior Investment Analyst at Wide Moat Research.

Contributor for Safe High Yield, The Dividend Kings, iREIT, and The Forbes Real Estate Investor.

I am also the former  editor-in-chief and portfolio manager at The Intelligent Dividend Investor.  

Check out my youtube channel for other investing ideas: https://www.youtube.com/channel/UCP7AhF_TqJSE7fN7CFwxKlg?view_as=subscriber

Ranked #18 overall blogger by TipRanks for 2014.

Former contributor at TheStreet.com (where I cover stocks held in Jim Cramer's Action Alert PLUS Charitable Trust Portfolio), Investing Daily, and Sure Dividend.

Former Editor-in-Chief of The Dividend Growth Club and The Income Minded Millennial.

I am a young investor focused primarily on dividend growth stocks. Seeking Alpha, and more specifically, the dividend and income community that exists here, has played a significant role in my development as a portfolio manager. I am not a professional, though I do manage my family's finances. I enjoy the process; the research, the decision making, the strategic planning...and not paying a financial adviser to do the work for me.

I've built what I believe to be a conservative, diverse, and balanced dividend growth portfolio currently consisting of ~60 positions. At the end of every month I break down the portfolio in my Nicholas Ward's Dividend Growth Portfolio Updates.

Thus far, I've been able to meet by goals from income, income growth, and capital appreciation standpoints. I use a wide variety of metrics, both fundamental and technical, when establishing fair value when doing my due diligence on an individual company. All of my methods are discussed in my work here.

I hope this work inspires debate, conversation, and education - this is why I write for Seeking Alpha, to give back to the community that has helped me so much and to hopefully contribute, in some way...even if its by posing a question, to the growth of others.

*I should note that all articles that I write here are done so for my personal informational/educational purposes only. Any purchases that I make or opinions that I express are not meant as recommendations for anyone else. Please perform your own due diligence before following my lead into or out of a position. I am not a professional. I am not a financial adviser of any sort.  I enjoy investing and the open discussion that articles on this site inspire - this is why I write, not to influence anyone else's decisions, but to enhance my own ability to make sound financial choices. That being said, I wish the best of luck to everyone. May we all meet our own financial goals.

Analyst’s Disclosure: I am/we are long MRK, GILD, CELG, BMY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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