5 drug stocks examined

Dear Mr. Berko: We are in our early 50s, and our account is worth $708,000. We haven’t added any more money, and it’s nearly doubled in value in 11 years, and we thought we were on the right road, but we recently realized that the stock market has done much better. So we talked to our stockbroker, who’s been honest in dealing with us. We want to be more aggressive rather than own the bland but good stocks he buys for us. He reluctantly suggested that we invest $5,000 in each of the following drug stocks: Mallinckrodt, Accelerate Diagnostics, Globus Medical, Zoetis and SciClone Pharmaceuticals. My wife and I would appreciate your thoughts on each issue.

— JL, Portland, Ore.

Dear JL: I suspect that some of your friends have been bragging about how well they’ve done in the stock market since Donald Trump was elected. Those steady-Eddie stocks have given you a comfortable 6.8 percent average annual return in the past 11 years. That’s acceptable. If you won’t stay the course, that road could have some sharp turns, and the midden could hit the windmill. Still, I’ve little objection to owning 100 shares of each of those five companies.

I can’t pronounce Mallinckrodt (MNK-$45), which has $4 billion in revenues and is a global specialty biopharmaceutical company. MNK develops, manufactures and sells specialty pharmaceuticals, biopharmaceuticals and nuclear imaging agents. Its recent acquisition of Stratatech, a maker of human skin graft products, should prove valuable. Stratatech dovetails with MNK’s strategy of investing in under-resourced therapies so they can reach full potential. Buy it.

Accelerate Diagnostics (AXDX-$28) is a $250,000-revenue in vitro diagnostics company providing solutions to bring about extremely rapid diagnoses of serious infections. The increase in resistance to antibiotics because of misuse and overuse is among the most serious health threats of our time. And sadly, too many diagnostic results can take several days to complete. AXDX’s recently patented platform technology addresses these challenges. It delivers accurate results from tests of infectious pathogens, which usually take days to complete in a lab, in a matter of minutes or hours, while the patient is still on the operating table. Revenues and earnings are expected to soar. Buy it.

Globus Medical (GMED-$31) is a medical device company focusing on the design, development and commercialization of products that promote healing in patients with spine disorders. This $565 million-revenue company, formed in 2003, came public at $15 a share in 2013. GMED is a highly regarded medical engineering company that has launched more than 100 products, addressing a broad array of spinal pathologies in response to the evolving needs of surgeons and patients. Earnings may grow by 10 to 12 percent annually, and I’d be surprised if, in the next few years, a larger competitor failed to seek GMED’s hand in marriage. Buy it.

Zoetis (ZTS-$59), which I’m also having trouble pronouncing, is a 2013 spinoff from Pfizer. ZTS is a $4.9 billion-revenue company, and 50 percent of revenues occur in the U.S. It’s a mover and shaker in the discovery, manufacture and commercialization of medicines and vaccines for livestock and companion animals. Management focuses on five major categories: anti-infectives, parasiticides, vaccines, medicated feed additives and pharmaceuticals. And a Harvard chemist I know swears that many of ZTS’ pharmaceuticals can be safely used by humans, at a cost that’s about 70 percent less than the identical drugs prescribed by your physician. Zoetis may have the hallmarks of a great dividend growth stock. Buy it.
SciClone Pharmaceuticals (SCLN-$9.75) is a $160 million-revenue pharmaceutical company with an impressive portfolio of therapies for infectious diseases, cardiovascular disorders and oncology patients. Though based in California, SCLN has a corporate strategy that is primarily focused on China, where SCLN has an excellent reputation, strong brand recognition and years of experience. SCLN has zero long-term debt, plenty of cash, growing revenues, improving operating margins and net profit of 20 cents for each dollar of sales. Thomson Reuters and Standard & Poor’s Capital IQ have “outperform” ratings on the stock, but I did notice that the company’s president and CEO, Friedhelm Blobel, sold 501,000 shares in August and then another 436,000 shares between October and March. Perhaps he knows something your broker doesn’t. Bu yao mai!

—————

Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at mjberko@ yahoo.com. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

COPYRIGHT 2017 CREATORS.COM