Entering text into the input field will update the search result below

3 Reasons Warren Buffett Loves Bristol-Myers Squibb

Apr. 05, 2021 6:08 PM ETBristol-Myers Squibb Company (BMY)178 Comments


  • Warren Buffett stands a titan among investing legends, generating over 16% annual inflation-adjusted returns for 55 years. That's a 3,908 fold increase in real wealth.
  • While I don't agree with all Berkshire investments, when it comes to Bristol-Myers, which BRK recently bought $2 billion of, I'm in complete agreement with the Oracle of Omaha.
  • BMY represents a wonderful company, at a wonderful price. It's a classic Buffett style "fat pitch" and I've swung away to the tune of $12,000 in my retirement portfolio.
  • Bristol is literally priced for zero growth forever, and even significant patent cliffs make that a very low risk scenario given its incredibly strong drug pipeline.
  • Even factoring in the patent cliffs, analysts think BMY could deliver 158% total returns over the next 5 years, 5X more than the S&P 500. While pharma isn't for everyone, today BMY represents one of the most reasonable and prudent Buffett blue-chip buys you can make.
  • This idea was discussed in more depth with members of my private investing community, The Dividend Kings. Learn More »

The greatest investors in history inspire awe, and it's not hard to see why.

The Greatest Investors In History

Name Returns Time Horizon
Jim Simmons (Co-Founder Renaissance Technologies) 71.8% CAGR

1994 to 2014 (best investing record ever recorded)

FORTUNE Most Powerful Women Summit - Day 2
Photo by Paul Morigi/Getty Images Entertainment via Getty Images


Dividend Kings helps you determine the best safe dividend stocks to buy via our Safety & Quality Tool, Automated Investment Decision Tool, & Research Terminal.

Membership also includes

  • Our company screening tool
  • Access to our five model portfolios
  • Daily Blue-Chip Deal Videos
  • 50% discount to iREIT
  • 50 exclusive articles per month
  • Our weekly podcast
  • Real-time chatroom support
  • Exclusive daily updates to all my retirement portfolio trades
  • Access to numerous valuable investing tools

Click here for a two-week free trial so we can help you achieve your financial goals while sleeping well at night in all market & economic conditions.

This article was written by

Dividend Sensei profile picture

Dividend Sensei (Adam Galas) is an Army veteran and stock analyst with 20+ years of market experience.

He is a founding author of the investing group The Dividend Kings which focuses on helping investors safeguard and grow their money in all market conditions through the highest-quality dividend investments. Dividend Sensei and the team of analysts (Brad Thomas, Justin Law, Nicholas Ward, Chuck Carnevale, and Sebastian Wolf) help members invest more intelligently in dividend stocks. Features include: 13 model portfolios, buy ideas, company research reports, and a thriving chat community for readers looking to learn how to invest more intelligently in dividend stocks. Learn more.

Analyst’s Disclosure: I am/we are long 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.

Dividend Kings owns BMY in our portfolios.

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.

Recommended For You

Comments (178)

Rex Rode profile picture
There are 6.4 billion reasons not to own this stock....
This is a classic example of market shunning value plays. Personally, I seek safety in favorable value picks like BMY that also pays decent dividend.

As the author eloquently laid out in this article, taking a multi-year position at current prices will most likely generate darn good risk adjusted returns. The beauty of these kind of investments, is that as the price momentum picks up, the investor base will start broadening out. Action begets more action. When a "fat pitch" comes one's way, cannot overthink investment rationale.

Thank you, @dividendsensi, for a well researched presentation. You always do complete justice to your writings. Your efforts are highly appreciated.
I have owned since BMY was 35. It’s a slow and steady mover that continues to gain momentum.
Rex Rode profile picture
How do U feel Dividend Sensei about BMY being on the hook for possibly 7-8 billion that they were hoping not to pay (IRS 1.4 B + the future CVR litigation up to 6.4 B?) The best case scenario for BMS is likely 3-4 billion. Worst case, the entire amount.
Dividend Ambassador profile picture
@Rex Rode I don’t know how Sensei feels but I don’t see it as a big deal. It doesn’t change the BMY story. Maybe BMY can work out a deal w IRS and pay much less than the worst case scenario. Even worst case scenario makes it nasty a short term hit. BMY still has the same robust pipe line. They still robbed the CELG shareholders blind and stole a great business at an absurdly low price. I have never witnessed a deal that was so massively accretive to the earnings of the acquiring company the second it closed. BMY are still GUSHING cash and will continue to gush cash. They can pay the debt. They can pay the shareholders. They can pay the damn IRS. They can continue to “acquire” other great companies. The sky’s the limit.
Rex Rode profile picture
@killiondt I agree with everything you said. So along that line, they should be able to settle with the CVR group too. I mean really, does BMS really think they should get approval of all 3 drugs before the final deadline and not have to pay a dime for them? Believe me, the CVR case is only gaining strength. If it goes all the way to court I believe BMS runs a significant risk of losing entirely. No court/jury is going to side with BMS when the Liso-cel delays can be pinpointed to BMS missteps and Covid issues (both cited in the FDA reports.) BMS should be trying to settle right away for 2-3 billion. The further this goes the uglier it will get. I'm sure Buffet is telling management the same thing.
@Dividend Sensei Thank you for sharing. For the past few years, I've been writing OTM MSFT covered calls and OTM puts on MSFT, BMY, BTI, INTC in an effort (mostly failing) to trim an overgrown MSFT position and buy undervalued companies. This market is crazy! What could possibly go wrong? fun times!
would it be the main reason its pays 3% dividend?
Dividend Sensei profile picture
@johnny corsaro That's a nice dividend compared to the S&P 500 and aristocrats.

It can't hurt, though I think Buffett is more focused on the quality and value proposition.
@Dividend Sensei Yeah, right. Buffett is what going n 91 now and he has plenty of time to spend 100 Billion dollars
Dividend Ambassador profile picture
@johnny corsaro johnny, the important thing is that the payout ratio is very low. Per share earnings went from $4 (2018) before the CELG deal to now $7.50 projected this year w the legacy CELG revenue integrated. People miss that BMY managed to pull off one of the great heists in corporate history when they ripped off CELG from its shareholders for the price of beads and trinkets. After years of token increases BMY has already moved to robust increases and this can continue now for many years with the massively stepped up earnings and free cash flow.
No bulls worried by really huge insider sales?
Thank for the article.
Dividend Sensei profile picture
@Robert SWAN www.gurufocus.com/...

In the past 3 months 25,000 shares sold by insiders.

In the past 12 months 322,528 worth about $19 million.

That's almost certainly stock-based comp, which makes up the majority of the executive pay packages.

Nothing huge or alarming about it.
@Dividend Sensei agreed...(and one could even make the case that it shows the execs are smart enough to know to diversify their pay packages -- rather than just sit on all their company stock til it becomes the majority of their portfolio as well as their paycheck)...
Rex Rode profile picture
@Robert SWAN I'm more worried about the potential 8 billion dollars in loss. 1.4 billion to the IRS and 6.4 billion to the CVR case....
Amitmn profile picture
Forgive me all ye Merry gents glorifying BMY...
Instead of this hugely elaborated essay of how wonderful this company is (just bc the oracle bought it?) I have ONE word for you: headlines.
You check the news and discover $1.4B (with a capital B) in backlog taxes trickery and a little cherry on top of that huge toad of a Sunday with an added $75m (this time it’s only an M...) for more shenanigans of underpaid insurance rebates.
Have you all lost your mind or have I???
For a terrible terrible company (see its history over any length of time it’s an absolute dog with ticks!) to have outstanding $1.5B (!!!!!) in back taxes and fines and nothing to shout about including a miserable 3% yield... sorry I’m just shocked no one is screaming the emperor is NUDE. run and hide people, run and hide from this company.
I’m long on Abbvie all the way btw as it’s a totally different ballgame but completely out of chevron, Merck and some other BH choices I just do not understand for the life of me.
@Amitmn You have noticed how much the company earns per year? Even if the allegations are true (at the moment it is a NYT-article) the tax backlog is around 1 month in earnings. Not to forget that BMY was down 1.87% yesterday, so around $2.7 bn. So even if they have to pay back that money it doesn't change the business case in any way.
Amitmn profile picture
@German-Investor my issue is that even with those huge yoy profits and terrific numbers the market still treats it as an unwanted child... how much better can they do and get no response from the market. Ever. Not over 2, 5, 10 or 20 years. Compared to Abbvie it’s glued to the bottom of the chart. BMY and MRK alike.
That’s exactly the kind of company that the market responds only to catastrophes not triumphs. That $1.5B potential loss will throw them down 30% off its current price. Just look at vistra/ NRG with similar issues after the Texas calamity. Now try and imagine that happening to BMY with a mere 3% div you’d need 10 years to catch up... makes me extremely edgy ...
@Amitmn 30% off because of a potential $1.5B loss at a company valued $150bn? So the company will lose $45bn because they could have to pay taxes valued $1.5bn? Doesn't make any sense.
I don't know what the market will do but a company growing EPS at around 6% per year + 3% dividend yield will return around 9% per year without a change in the p/e ratio. If you think it is realistic that a safe and growing blue chip should trade at an p/e ratio of 8-9 and lower in the next years (because of the growth) then that is your opinion. I think it should at least trade at a P/e ratio of 13 but I also didn't mind if it returns 9% per year with no revaluation.

ABBV was also a huge dog until the end of 2019. So that is not a good example to show me why BMY is not worth an investment.
ArtfulDodger profile picture
Fellow Investors:

I own several pharma stocks. They have a lot of potential under normal conditions, but then there's a government that is doing all it can to pass Bernie and Warren's dream policies, at least to some degree.

And anything they can place what they've made a pejorative in front of, in this case, "Big," they detest, such as "Big Pharma." (You know the others: "Big Oil"; "Big Banks"; etc.) And by so knocking these companies for years have convinced millions of young folks to hate them, too, with hardly more than a whim for their case.

That's a concern! Also, as far as BMY goes, and although I don't follow WB, I would like to know at what price BRK paid of it.


Dividend Sensei profile picture

Regulatory risk is part of the ESG risk rating, and we have 6 rating agencies covering the full risk profile of the company for us.

Single-payer is a very low risk, according to all analysts, rating agencies, and morning.

"Under 5% probability over the next 10 years" according to Morningstar.

"The intelligent investor is a REALIST who buys from pessimists and sells to optimists." - Ben Graham

In this senate, there are 8 conservative Democrats who demanded to be able to vote against the $15 minimum wage.

Something 90% of Democrats and 60% to 70% of Americans support.

This was AFTER the Senate Parliamentarian ruled that $15 minimum wage can't be passed through reconciliation.

The blue-dog Democrats insisted that a vote be brought up so they can go on the record opposing something the progressives love.

Does this sound like a Senate that will ever pass single payer? Something Biden is on the record opposing?

If those 8 Democrats are primaries out, they are likely to be replaced with Republicans.

And a 50 seat majority becomes a 42 seat minority.

Manchin just said no to filibuster reform.

Even if that passes, Dems can't afford to lose a single vote.

So when 27 rating agencies and analysts say not to be overly concerned about what Bernie or Warren propose, the facts back them up.

What you personally think of single-payer is irrelevant.

The only thing that matters is whether or not it can pass. And a sub 5% risk is not anything to lose sleep over.

BMY's 18 to 20X fair value PE is over the last 20 years.

Obamacare? Still 18 to 20.

Pre-Obama care? 18 to 20.

Slow growth? 18 to 20.

Fast growth? 18 to 20.

Like I said, unless BMY's growth outlook collapses significantly, which is not likely according to the 27 experts who factor in regulator/political risk into their ratings and growth estimates, BMY will eventually return to 18 to 20 PE.

Most likely within 5 years.

Thus the fat pitch anti-bubble opportunity for glorious profits and very safe and steadily growing dividends.
@Dividend Sensei a lot more reassuring and good analysis. Wondering if the current POTUS will find some loopholes in legislation and try to force things through by executive order or claiming national security etc... haha, but thanks for sharing your analysis and perspective.
Dividend Sensei profile picture

On energy, there are hard limits to what EOs can do.

Legal action can tie things up for years, and for the major stuff, Congress has to pass it.

And right now Congress is likely to be a small majority for whoever is in charge.

That's likely to remain the case for the next decade since the census is now complete and gerrymandering can't be overturned once districts are redrawn.
Willow Street Investments profile picture
A Drug-Pricing Overhaul Is Coming. What It Means for Stocks.
By Josh Nathan-Kazis
April 6, 2021 11:13 am ET
Order Reprints
Print Article

Greater clarity about the outlook could eventually help drug stocks.
Legislation aimed at curbing drug prices appears to be finally on its way, after years of promises from both Democrats and Republicans and worries from healthcare investors. Now, the prospect is setting off a debate over what it will mean for drug stocks.

In notes out early Tuesday, analysts at Cowen and SVB Leerink laid out the challenge. Both analysts agreed that drug-price legislation, along with other factors, could have a negative near-term effect on drug stock prices.

The longer-term picture, however, may be rosier. In his note, Cowen analyst Steve Scala wrote that once legislation passes, drug company stocks might actually rise.

“History suggests that passage or even defeat of pricing legislation could lift pharma PE multiples as clarity is gained and investor fears ease,” Scala wrote.

He noted that, before the passage of the Affordable Care Act in 2010, large-capitalization pharmaceutical firms were trading far below the average price/earnings ratio of the S&P 500. By 2013, their average P/E ratio was on par with the S&P 500 average.

The S&P 500 Pharmaceuticals index now trades at 13.6 times the earnings expected over the next 12 months, well short of the S&P 500 index, at 22.6 times, according to FactSet.

After a year in which Covid-19 all but pushed aside conversations about overhauling drug pricing, the issue is back. Sen. Bernie Sanders, at the helm of the Senate Budget Committee is pushing a number of proposals, while other efforts move through the House of Representatives. In his note on Tuesday, SVB Leerink analyst Dr. Geoffrey Porges wrote that there is substantial heat on the secretary of Health and Human Services, Xavier Becerra, to make progress.

“The new secretary of HHS faces immediate pressure, and expectations, to tackle drug pricing, and the influence of anti-pharma Democratic members in the house and senate will become more apparent through this year and heading to the mid-term elections in 2022,” Porges wrote. “Both Democrats and Republicans are expected by voters to show progress on drug pricing reform, and this alignment of interests suggests to us that significant changes are likely.”

While Scala sees P/E ratios rising after passage of drug-pricing legislation, he says that earnings per share for the large-cap pharma firms could fall, depending on which proposal passes. In his Tuesday note, he calculated the risks to the earnings of a number of large-cap firms, based on various potential pieces of legislation. For the bipartisan bill proposed by the Senate Finance Committee, which would, among other things, make changes to Medicare Part D, Scala says that the average risk to large-cap pharma EPS is 4%.

Medicare Part D helps cover the cost of prescription drugs.

“EPS risk from drug pricing reform ranges from 3% for plans requiring $10B in annual drug industry funding to 12% for plans such as [House Resolution 3], where annual price tag could be $40B,” Scala wrote. “Senate Finance bill, perhaps most likely, would place 4% of EPS at risk with $13B yearly fee.”

Porges, in his note, presented the drug-pricing risk as one of a number of challenges in Washington, D.C., that could depress drug stocks. Also on the list are changes at the Food and Drug Administration and the Federal Trade Commission.

“We believe that together these risks will put a cap on any recovery in large biopharmaceutical stock multiples, at least until they are substantively resolved,” Porges wrote.
Dividend Sensei profile picture
@Willow Street Investments Thanks for this.

Note the possibility for negative short-term price impact.

But not to the fundamentals.

If fundamentals keep going up the price going down is, by definition, a glorious long-term buying opportunity.

"Today I buy what others won't, so tomorrow I'll earn returns others can't." - Jerry Rice paraphrase

I chased BMY down to $45, it bottomed at $42.

Nice profits on that, but I've kept buying on the way up because fundamentals have been growing almost as fast as the price.

8.3X forward earnings and 8.0X if you use the 2026 patent cliff trough.

There has never been a patient long-term investor in history that has paid 8X earnings for a quality blue-chip that's been growing steadily and is expected to keep growing steadily, that's lived to regret that decision.

It's always possible this will be the first time.

But BMY at 8X earnings is one of the fattest pitch, anti-bubble blue-chips on Wall Street today.

Not every anti-bubble blue-chip investment pays off.

Historically 80% do, 20% don't.

But I watch the fundamentals every quarter and BMY keeps proving my facts and reasoning right.

Unless something drastic changes, BMY likely going to be one of the best investments of the next five years.
Willow Street Investments profile picture
@Dividend Sensei I have been in BMY since about 2001 at about $22 a share and have been reinvesting dividends ever since.

Yeah it is not AAPL (otherwise I would several million dollars by now) but my original 1500 shares are now over 3000 shares.
Dividend Sensei profile picture
@Willow Street Investments Not bad. 9.4% CAGR total returns.

That's what analysts roughly expect from BMY over the coming decades.

And it's very likely to beat the S&P 500 by about 1.5% annually.
Buffet is no longer the sole stock-picker at Berkshire Hathaway. He has a crew of underlings he has increasingly delegated responsibility to. They do make "non-Buffet" picks so don't assume too much.
Dividend Sensei profile picture
@weemo451 True, for several years, almost 10 in fact, Todd and Ted have been managing money for BRK.

I believe each is now up to $20 billion in AUM for BRK.

Buffett is still the primary shot caller for the big deals.

Multi-billions and it's likely Buffett.

$2 billion each into BMY, ABBV, and MRK is likely Buffett though Todd or Ted might have pulled the trigger.
DS, there is a company that Buffett loves a lot more than BMY and he knows it well.
Dividend Sensei profile picture
@Stephenbakerlaw There are many companies BRK owns more of.

But few that they've been buying such large amounts of recently and that I agree are exceptional opportunities.

Some of BRK's recent buys, such as Kroger, are not ones I would have emulated.

The same with Verizon and Chevron.

But BMY, MRK, and ABBV I certainly see the logic in.

And I've been buying them as well.
@Dividend Sensei I think you missed my point, LOL. Buffett has repurchased $20 billion +/- of his own stock in the past year. If you want to know what company Buffett really loves, that is a pretty good tell.
Dividend Sensei profile picture

I own BRK, which I bought back in April 2020.

BRK is overvalued right now.

Buffett disagrees but I have to remain disciplined.

And my valuation model is based on earnings and cash flows, specifically the historical fair value multiples.

If BRK grows at the 12% analysts expect over time, then eventually BRK will outperform the broader market.

I own BRK because it's a growth stock. That one day I believe will pay dividends.

Because the money pile will grow too big not to.
BM Cashflow Detective profile picture
Bristol-Myers' main competitive advantage is primarily its ability to create patents and pharmaceuticals with high sales potential through research and development, and to acquire them through acquisitions. This is proven success that can also be assumed for the future.

A very good 5-year forward PEG ratio 0.86 includes significant free additional leverage compared to the Large Cap Pharmaceuticals industry's still good TTM PEG ratio of 1.90.

The current Blended P / FCF 10.54 shows an undervaluation compared to the 10 year fair value of Normal P / FCF Ratio 27.68. After that, a really very high current margin of safety of 61.92%.

In other words. Hardly any downside potential and a lot of upside potential.

The strong sales of drugs like Opdivo, Revlimid and Eliquis are encouraging and nowhere near adequately priced in. These should continue to increase the return on sales. Bristol-Myers' efforts to develop its pipeline are also encouraging and are also confirmed by analysts.

There is a lot of pessimism in the Bristol-Myers share price. Wonderful. All in all, it's an investment that is very well tailored to my taste.

I'm long $BMY

Enlightenment does not mean standing in the light
but learn to see in the dark.
Kmasse profile picture
@BM Cashflow Detective Great comments as always. Why do you reckon BMY is so undervalued?
BM Cashflow Detective profile picture
For this there is apparently a collection of several bad news.

The Celgene Acquisition Risks.

Bristol-Myers has faced generic competition on several of its key products.

The company is also facing tough competition in the immuno-oncology field.

Pipeline setbacks in the development of new drug candidates.

Global efforts by local governments to contain healthcare costs. Which in turn leads to price pressure on drugs.

High Debt Ratio.

Compared to its peer median, this is noticeable as follows.

Bristol-Myers has relatively low profit margins and medium wealth efficiency. Earnings per share and operating margin fell four times in a row. Narrowing of operating margins thus contributed to decline in earnings.

Over the last five years, Bristol-Myers's return on assets has declined from about median to less than the median among its peers.

And finally, the good news.

Bad news doesn't last forever either.
Dividend Sensei profile picture
@BM Cashflow Detective

The version of that Carl Yung quote I've seen is

"One does not become enlightened by imagining figures of light, but by making the darkness conscious." - CY
Mick Research profile picture
"Today I wanted to share the 3 Reasons why Buffett likely is such a fan of this Super SWAN pharma giant,"

Berkshire's market cap ~$600bn. He has invested less than $2bn, that's ~0.3%. Not a big fan of BMY, if you ask me.
warren doesn't look at BRK's market cap, he looks at the float. BRK could be valued by other people at $1B and be soundly hated, but if he wants a position to be 1% of his portfolio, then he takes 1% of his own pool of investible cash, same as you do. not 1% of what the market thinks of him.
Dividend Sensei profile picture
@Mick Research In Q4, with the market at record highs, and 36% overvalued, BRK bought $6 billion of BMY, ABBV, and MRK, 3 brand new companies for its portfolio.

That's a substantial amount.
@Mick Research Mr. Buffett had said in the past that Pharma has high risks, so the way to invest is to spread your bets, and buy when P/E is low. This looks like he is putting his money where his mouth is :)

It's interesting that he bought PFE as well, but then quickly sold off. Glad to see he kept ABBV and BMY. MRK is a head scratcher for me.
Andrew Feazelle profile picture
I like BMY as it's been trading relatively flat for a year, allowing me time to add here and there. Plus I like the 3% dividend.
Dividend Sensei profile picture
@andrewfez Very wise mind set.

Blue-chip bargains that remain bargains for years are the key to a rich retirement.

BTI fell to the lowest PE in 20 years...2 years ago.

The fundamentals have improved and so the valuation has remained pretty flat at the lowest PE in 20 years.

Investors have made excellent 16% CAGR total returns, and yet bargain hunters have been able to buy for years.

That's how I've invested about $57K into BTI so far.

And I continue to buy small amounts on a steady schedule.

If a blue-chip stays undervalued for long enough, I'll invest a small house worth into it.

So that when the price finally catches up to fundamentals, which I monitor closely over time, then my absolute profits will be enormous.

For following common sense, Wall Street rewards patient long-term investors with eye-popping riches.
Mister Doom profile picture
I own BMY and VZ for their dividends. I don’t expect much more.
I don’t think either one will go up much. That’s ok
Dividend Sensei profile picture
@Mister Doom All companies eventually return to fair value.

The reason value investing keeps working is that few people realize that "long-term" = 10-20 years, not 1 to 2.

Even if you tell people this, and show them the data that proves it, it's still too long for most people.

It's one thing to say "buy and hold for 10 years."

It's another if the company you buy at a 20% discount, is 30% undervalued in a year and 40% undervalued two years later.

And some even become 50% undervalued 3 years after you bought them.

With the fundamentals firmly moving higher the entire time.

Remember all those rolling return tables I use in my articles?

That highlight the best rolling returns from bear market lows?

Fundamentals moving higher while prices fall for years is how those amazing returns happen.

As high as 26% annually...for 15 years.

What hyper-growth legend achieved 3116% total returns over 15 years?


As Joel Greenblatt said, "Buying great companies at bargain prices is the key to making lots of money."

BMY has been in a bear market for almost 4 years.

It's not a momentum stock.

Not yet anyway.

One day it will be.

And then it won't just return to fair value of about 19X earnings.

It will overshoot just like happens with all blue-chips.

I doubt I will ever sell my BMY shares, as long as the thesis holds and they don't become 67% or more overvalued.

Which is unlikely. But modestly overvalued, by 10% to 30%? That's a near certainty if your time horizon is long enough.
Mister Doom profile picture
@Dividend Sensei I find if you hold a stock too long something will
Always go wrong, no buy and hope for me.
Dividend Sensei profile picture
@Mister Doom

I'm not a buy-and-hold purist like B&H 2012.

He never sells anything no matter what. Still owns GE and LUMN, the former CTL.

Both used to be aristocrats.

If the thesis breaks then I'll sell.

But holding forever is OK because the winners can go up a lot more than the losers can fall.

You can't lose more than 100% but you can make millions of percent over decades.
5ofDiamonds profile picture
I dismiss it as herd mentality article @Dividend Sensei Everyone says $BMY is a great buy, and more articles pop up. SA has seen this in past with $SKT. My 1c.
@5ofDiamonds just because everybody on SA writes about the stock doesn't change its fundamentals. You should dismiss a stock because of that and not because of the number of SA-articles. SKT had and has not really great fundamentals and is in an industry that is in a secular decline. Cannot see that in BMY.
Dividend Sensei profile picture
@5ofDiamonds The difference between BMY and SKT is what I call clean and dirty value.

Clean value is like BMY, where the earnings, cash flow and dividends are rising every year, while the price falls over some overblown risk.

Dirty value is when the fundamentals collapse and then the question becomes "is it a permanent collapse or will the company return to growth."

SKT now appears likely to survive. That wasn't a sure thing, so I wouldn't have called SKT a Buffett-style fat pitch.

The growth consensus was negative for many months.

My brand of anti-bubble blue-chip investing is finding a blue-chip with positive growth consensus from all sources.

That's priced for negative growth.

And then buying it for as long as the fundamentals remain positive and the market is pricing in negative growth.

As long as the company grows at 0+% I'm guaranteed to make a lot of money.

While collecting generous, safe, and steadily growing dividends.

Getting paid by the company to make a lot of money is a ridiculously good deal.

Most people don't realize how good a deal it is. This is why I never have to fear running out of great bargains to buy.

I could keep writing on SA for 50 years. Amass a following in the millions.

Each article might be sent out to 1 million real-time followers.

And still the bargains would be plentiful.

Disciplined financial science, by definition requires more discipline and patience than most people.

Buffett has been preaching the "secret" of success for over 50 years.

Yet most investors still do very poorly.

"The stock market is designed to transfer money from the active to the patient." - Warren Buffett
PFE please buy BMY
@viralca Never happen. PFE could never handle that much debt. You picked the wrong dog in that fight. Long BMY and ABBV.
Dividend Sensei profile picture
@viralca That would be a massive deal.

One that makes sense, but would require a ton of stock and debt.

Remember BMY took on about $52 billion in total debt to buy CELG and MyoKardia.

$177 billion is BMY's enterprise value.

Add on an appropriate premium, and this could be a $250 billion deal.

PFE is big, but it would need to be a merger of equals to pull off a deal of that size.
al_chemyst profile picture
A Buffett recommendation seems to be the kids of death, these past 5 or 10yrs.
He has to get special considerations to make money, like 10% int. guaranteed warrants, and the like. He doesn't play the same game we do.
Ogillies profile picture
@al_chemyst kiss of death? I've heard a younger person say "smoking mirrors" once.
@Ogillies "Kids of death" to me means our young progressives in Congress who are trying to kill off capitalism.
@al_chemyst Sounds like something my grandparents may have referred to when my sisters and I would get together with my cousins and start planning some shenanigans ... those "kids of death." fun times!

or maybe when he invests in old tobacco, or new cannabis stocks, or new at home gambling stocks ... what could possibly go wrong? "kids of death!" fun times!
Justss profile picture
Just because it's historical P/E is between 18-20x does not mean it will revert there ("91% probability" in your words). That's totally backward looking. Maybe things have changed and it will never achieve it's past P/E range, but ur assuming it was there before, so it must go back there. How's that working for you now that the stock is sub-10x, cuz u could have made that argument at any point in the past few years. Obviously, things did change. I am a recent BMY buyer ~61 and believe the potential EPS acceleration will drive the P/E higher, hopefully into the low-mid teens. But your forecast is way too aggressive and not based on anything. What is your forecast for S&P 500 earnings if every stock in the index reverts to it's past P/E range ??
Andrew Feazelle profile picture
@Justss His stocks only have to revert to the historical average 6 out of 10 times for him to win. Earnings growth (correlated with capital appreciation) + dividend + multiple expansion is their return model, so even if it only hits 15 or whatever the industry average is, everyone is still making money...
Dividend Sensei profile picture
@Justss That 18 to 20 PE is both over the last 20 years, and the last 10.

ACA passes? Still 19X earnings.

Flat growth? Fast growth? Still 19X earnings.

Unless BMY's fundamentals are totally different than the last 20 years, meaning growth is negative or we get single-payer healthcare, there is a 91% probability that BMY will eventually return to 18 to 20X earnings.

Not my opinion, but the collective opinion of hundreds of millions of investors over 20 years.

And their opinion is as close to objective reality as we'll ever find on Wall Street.

And the consensus opinion of 27 analysts and rating agencies is that "this time isn't different".

In case they are wrong, that's where risk cap recommendations come in.
Dividend Sensei profile picture
@andrewfez Correct.

For the best analysts 60% to 80% of investments will work out as expected.

However, if you focus on quality at a fair price or bargain price, then even the ones that don't work out as expected will make you money.

I own 109 companies.

6 of them are down since I bought them, on cap gains, ignoring dividends.

-3.5% is my biggest loser.

Financial science is statistical in nature. But it is a science.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!

About BMY

SymbolLast Price% Chg
Market Cap
Yield (TTM)
Rev Growth (YoY)
Short Interest
Prev. Close
Compare to Peers

More on BMY

Related Stocks

SymbolLast Price% Chg
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.