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Is It Time To Buy Merck?

Apr. 25, 2012 1:01 PM ETMerck & Co., Inc. (MRK)2 Comments
Robert Freedland profile picture
Robert Freedland

My favorite app on my Apple (AAPL) iPhone has to be the simple "Stocks" program that comes pre-loaded on this clever smartphone. Every time I hear a recommended stock, I add it to my list--creating an eclectic collection of stocks from many different industries. For those of you who have this app I would encourage you all to do what I do and utilize this program. In fact, my favorite way to use this app is to hold the phone sideways and view the 2-year charts on all of these stocks. There is much to learn by examining charts of potential investments.

One of the companies that is on my phone, yet is not a holding of mine, is Merck & Co. Inc. (NYSE:MRK), the multinational pharmaceutical firm. Looking at the 2-year chart of Merck it appears that this stock is 'breaking out' on the upside. I thought it would be wise to take a closer look at this company and share with you my observations.

Since we talked about charts, let's take a look at the StockCharts 'point and figure' chart on Merck:

Merck Point and Figure Chart 04/24/12

Certainly, this stock has been under pressure after peaking in January 2008, at $50, dipping to as low as $18 in March, 2009. Since then the stock has moved higher and now appears to be breaking out after moving higher than the recent high of $37 made in January, 2010.

Merck is scheduled to report its earnings this Friday. The company has already pre-announced that it will report below expectations. Is this stock a buy?

On February 2, 2012, Merck announced 4th-quarter 2011 results. Earnings came in at $1.51 billion or $.49/share vs. a loss of $(531) million or $(.17)/share last year on charges. Excluding 'items,' Merck came in at $.97/share beating expectations of $.95/share per

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Robert Freedland profile picture
Robert Freedland is a medical professional by trade and an amateur investor who has been blogging on Stock Pick Bob's Advice since 2003. He has been investing in the stock market for 46 years, having made his first purchase at the age of 13 of five shares of Global Marine in September 1967. He enjoys sharing his philosophy and perspective on investing, both by blogging and podcasting. Visit Bob's blog: Stock Pick Bob's Advice (http://bobsadviceforstocks.tripod.com/bobsadviceforstocks/). Since 2009, he has been managing portfolios on Covestor, which now include Growth and Momentum (http://covestor.com/robert-freedland/growth-and-momentum), Sustained Momentum (http://covestor.com/robert-freedland/sustained-momentum), Healthcare (http://covestor.com/robert-freedland/healthcare) and Large Cap Momentum (http://covestor.com/robert-freedland/large-cap-momentum).

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Comments (2)

dendv profile picture
Good article as I am long MRK also. As a dividend growth investor I am looking to buy more on the dips. I think it has room to grow thus growing its dividends.
Thanks for the article and research.
Robert Freedland profile picture
Thanks for the remarks. I am not a Merck (MRK) investor right now but it is a solid stock that was a favorite of even my father 40 years ago! They produce great products and loads of cash so the dividend appears well covered. However, I like a dash of growth in my investments and I am a bit concerned. Waiting for Friday!
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