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Vsevolod Gulyaev
Vsevolod Gulyaev

Best Pharmaceutical Stocks To Buy |TOP|

Big pharmaceutical stocks are appealing because they provide medicines that people rely on to improve their quality of life, and therefore will likely not cut back on regardless of the economic environment.

best pharmaceutical stocks to buy

Some traders piled into pharmaceutical stocks amid the pandemic in hopes of playing the short-term opportunity. However, long-term dividend investors are familiar with this sector because drugs that make your body hurt less and prolong your lifespan are likely to be prioritized in your daily budget. That means reliability in revenue to provide stable share prices and support generous dividends.

These nine pharmaceutical stocks are among the best for income investors. Each offers a dividend yield that's at or above the market average, and they all deliver consistency that buy-and hold investors can appreciate.

As far as pharmaceutical stocks go, AbbVie (ABBV (opens in new tab), $108.73) has put in a strong performance since its March 2020 lows near $65, with the shares up 68%. More recently, an August rally lifted ABBV stock back near its 2018 highs above $120 thanks to strong financials and product development news.

In July, U.K.-based pharmaceutical stock AstraZeneca (AZN (opens in new tab), $60.54) closed on a $39-billion takeover deal for competitor Alexion Pharmaceuticals as its latest bet on the lucrative "orphan drug" market. These treatments are often the only remedy for serious medical conditions. As such, they can be fast-tracked for approval by regulatory agencies. Additionally, they allow for instant demand and big margins from patients in need.

In Europe and the U.K., dividend payers often don't follow the fixed quarterly cycle that U.S. stocks do. But even though AZN only pays out distributions twice a year, its yield is still almost twice the average dividend among S&P 500 components at present.

When it comes to legacy pharmaceutical stocks, Bristol Myers Squibb (BMY (opens in new tab), $58.93) has roots dating back to 1887. BMY has manufactured a host of popular products over the years, including mass producing the original antibacterial blockbuster, penicillin, during World War II.

With scale like that, investors get stability and a strong balance sheet. But that doesn't mean LLY is a legacy pick among pharmaceutical stocks whose best days are behind it. Shares are currently trading around all-time highs after roughly doubling from the pandemic lows of March 2020. For the year-to-date, Eli Lilly is up more than 33%.

Gilead Sciences (GILD (opens in new tab), $67.56) posted solid earnings in July that prove this is a pharmaceutical stock with the wind at its back. Specifically, GILD saw a 21% year-over-year increase in Q2 revenue, driven by its blockbuster antiviral treatments Veklury and Biktarvy. Plus, GILD recorded impressive operating cash flow of $2.3 billion for the three-month period.

The icing on the cake is that investors are getting all this for a decent value relative to other pharmaceutical stocks, with GILD boasting a forward price-to-earnings (P/E) ratio of about 10 and a price-to-sales ratio of 3.2.

GlaxoSmithKline (GSK (opens in new tab), $38.41) is another one of the cheap pharmaceutical stocks on this list, with a forward P/E ratio of about 12.3. It also has a low price-to-sales ratio of just 2.2 times trailing revenue.

However, an eventual normalization in healthcare trends along with the anticipated spinoff of the company's consumer health division in 2022 should give GSK a nice tailwind. And an estimated $11 billion to reinvest in its core pharmaceutical and vaccine business as well as the efficiencies of a streamlined operational structure should help, too.

As with AstraZeneca, GSK is a U.K.-based firm and its dividends fluctuate a bit (versus the fixed structure of U.S. dividend stocks). But based on its annual payout, GlaxoSmithKline has a yield that is twice that of many other pharmaceutical stocks on this list.

Admittedly, there are things other than branded pharmaceuticals going on here. But for some investors, that diversified revenue is an appealing factor when you compare it with other stocks that live or die based on patent expiration cycles or upcoming FDA approvals.

That stability and reliability has allowed JNJ to deliver at least one dividend increase per year for nearly six decades straight, making it among the rare group of Dividend Kings with the most impressive record of increasing payouts on Wall Street. If you're looking for reliability among pharmaceutical stocks, then JNJ is definitely worth a look.

Pfizer (PFE (opens in new tab), $42.42) is one of the best-known pharmaceutical stocks on the planet. This U.S.-based healthcare giant is a Dow Jones stock and has been in operations in some way for roughly 170 years.

These include the spinoff of Pfizer's generics and off-patent drugs division in 2020 via Viatris (VTRS (opens in new tab)), which allows the firm to focus on branded pharmaceutical research. Additionally, there was the move to consolidate some of its consumer health assets like Advil pain relief or Centrum vitamins under a joint venture with GlaxoSmithKline.

French pharmaceutical company Sanofi (SNY (opens in new tab), $48.37) is a $120-billion drugmaker. It offers a variety of treatments, including drugs that target genetic disorders such as Gaucher disease and autoimmune conditions like multiple sclerosis. SNY's products serve an important niche for many patients around the world.

As with the U.K. pharmaceutical stocks on this list, Sanofi doesn't pay fixed quarterly dividends. In fact, it only pays once per year around the end of April or the beginning of May. But based on the most recent distribution of about $1.90 per share, SNY stock yields roughly three times what the typical S&P 500 company does. That could make this dividend stock worth waiting for.

Indiana-based pharmaceutical firm Eli Lilly employs more than 34,000 employees across 18 countries and sells its products in 120 different countries. The company was founded in 1876 by Colonel Eli Lilly, who was a veteran of the Civil War. One of the first products it developed was quinine, a medication used to treat malaria.

Currently, Novo employs more than 45,000 people and sells its wares in over 160 countries. It has also been named one of the best companies to work for for over a decade and in 2012 was named the most sustainable company in the world by Canadian media company Corporate Knights.

Abbott Labs was founded in 1888 and is headquartered outside of Chicago, Ill. The company is a large developer of pharmaceuticals and medical devices, including tests. Abbott is perhaps best known for some of its more innocuous consumables, such as PediaSure, Pedialyte and Similac. But, like other healthcare companies responding to the pandemic, it also has a Covid-19 test.

Each stock market sector comprises many industries, each with their own nuances, and healthcare is no different. Four of the most important of subtypes of stocks in the case of the healthcare sector include:

As defensive stocks, healthcare companies provide steady returns in any market. Because people will always need healthcare, the healthcare sector provides very steady, consistent returns that are uncorrelated with the overall direction of the stock market.

Disruption by new players is a constant threat for established healthcare stocks. More and more tech companies are getting involved in the healthcare sector. Firms like Amazon may significantly disrupt old ways of doing business. Nimble biotechs may outperform stodgy huge pharmaceutical firms.

Sustaining growth can be challenging for some types of healthcare stocks. Companies that make drugs and medical devices must convince health insurers and government agencies to continue buying their products. If these players fail to grant reimbursement approvals, their growth prospects can dim.

Pharmaceutical stocks are the shares of wider healthcare companies that focus on developing, manufacturing and distributing pharmaceutical products, such as drugs, medicines and vaccines. Investing in pharmaceutical stocks is a popular trend in times of political or economic instability. For example, given the Covid-19 crisis, pharmaceutical companies have been in high demand as they provide products and equipment, in turn increasing their share price and value.

The pharmaceutical industry is part of the wider healthcare sector, and these companies are active all year round, no matter the global situation. Share prices tend to represent the perceived value of a company by investors, and any subsequent profit and loss that may result after opening a trade. In order to value pharma stocks, it's important to analyse company fundamentals: the internal and external factors that may influence the performance of the business. This is part of fundamental analysis, which most traders will undertake before opening a position in the long term, though less often in the short term. Price-to-earnings (P/E) ratios help to value a company's share against its competitors.

Pharmaceutical stock investors look for growth and earnings potential and often prefer high-yield stocks, as this means that the company is likely to pay consistent dividends. Paying dividends to investors can help to strengthen loyalty, as well as confidence in success and future payouts.

All of the below shares can traded on our Next Generation trading platform through spread bets and CFDs. Please note that stocks are only available with a live account and cannot be traded with a demo account. Other perks of our live account include an exclusive trading forum, access to pharmaceutical ETFs and a range of platform features and trading tools.

Investing in Moderna stocks is another opportunity on this list for investors that are interested in rising pharma stocks. Moderna is a US biotech company that bases its research and development for vaccines and therapeutics primarily on mRNA molecules. The company already has alliances with other top pharma companies, including AstraZeneca and Merck, which is an indication of its promising future within the healthcare sector. In the UK, Moderna's vaccine was the third to be approved for distribution to the general public in January 2021, solidifying this small-cap stock as a main competitor against its large-cap rivals. 041b061a72


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