Crash-Proof Blue-Chip Stocks to Buy – Teva Pharmaceuticals (TEVA)
Another healthcare stock that I like, but for very different reasons, is generic giant Teva Pharmaceuticals (TEVA).
The stock isn’t a household name like blue-chip drugmakers, and it isn’t a biotech darling like high-powered pharma stocks researching impressive new cures.
Teva is actually quite boring, really, as the world’s largest manufacturer of generic medications. After a big company has run its course with a patented medication, TEVA steps in and makes the same drug for cheaper and sells it for less to patients that need it.
The margins are thinner, but you can make up for this with scale — and with more than $20 billion in sales annually in all corners of the globe, Teva certainly has the scale.
Now, there’s no breakout potential in TEVA stock since drug research isn’t really its game. But for low risk investors, that’s a big plus — because unlike some other pharma stocks out there, patent expiration will never be an issue that weighs on its margins.
Teva continues to grow ambitiously through acquisitions. In its recent earnings call, the new CEO said he is “aware of the opportunities around us, including potential larger transactions.” Soon after that, rumors started swirling that Teva will buy out India drugmaker Cipla Ltd. for $6 billion.
Not only will the Cipla deal (if it happens) tighten Teva’s grip on generics, but it also will provide big growth in an emerging market where healthcare consumption is rising rapidly — even more so than in an aging U.S.
With a 2.3% dividend yield, TEVA stock isn’t the highest dividend payer out there. But with a dominant share of the global generics market and a will to stay bigger than everyone else, Teva is a great long-term play for low-risk investors.