One glance at my Blue Chip Growth portfolio shows that pharmaceuticals companies have been leading the way in terms of performance.We’re living in a time where new — oftentimes lifesaving — pharmaceuticals are being brought to market at an unprecedented pace, and the truth is that consumers and the healthcare system alike will always favor pills over procedures.
While most of the recent attention on the pharmaceutical industry has been on Actavis plc (NYSE:ACT) having acquired Allergan, Inc. (NYSE:AGN) for $70.5 billion, other pharmaceutical companies are making notable moves, too.
The merger between Actavis and Allergan has created one of the world’s top 10 pharmaceutical companies in terms of sales, but here are two other pharmaceutical companies that are strong stocks to buy:
AmerisourceBergen Corp. (NYSE:ABC)
AmerisourceBergen Corp. (NYSE:ABC) benefits from U.S. healthcare reform. As one of the world’s largest pharmaceutical services companies, ABC helps drug makers and healthcare providers cut costs.
AmerisourceBergen is so good at what it does that it handles 20% of all pharmaceuticals sold and distributed throughout the country. ABC stock’s dividend yield is 1.1%. AmerisourceBergen just paid a dividend of 29 cents per share a few weeks ago, but we’ll likely see another dividend declared in early May.
In the meantime, AmerisourceBergen is expected to report second-quarter earnings in late April. Analysts expect ABC stock to post 13.2% annual sales growth and 12.3% earnings growth, and the bottom-line picture gets brighter the further we look ahead.
For fiscal year 2015, AmerisourceBergen is headed towards 16.4% annual earnings growth. ABC shareholders benefit from a trifecta of advantages: Healthy sales and earnings forecasts, a generous dividend and a strong stock buyback program.
ABC stock is a “strong buy.”
Medivation Inc (NASDAQ:MDVN)
I’m also recommending another promising biopharmaceutical company: Medivation Inc (NASDAQ:MDVN). Based in San Francisco, Medivation develops and markets novel therapies to treat serious diseases.
Medivation’s main treatment is Xtandi, which treats post-chemotherapy metastic castration-resistant prostate cancer (mCRPC). Prostate cancer is among the most common cancers in men; every day, more than 500 men are diagnosed in prostate cancer in America.
Up until a few years ago, men suffering from mCRPC had few options. So, the introduction of treatments like Xtandi has saved lives. Last quarter, sales of Xtandi jumped 82% in the U.S. and skyrocketed 246% outside of the U.S. Looking ahead to fiscal year 2015, Medivation expects U.S. sales of Xtandi to surge between 54.4% and 65.4%.
And that’s not even mentioning Medivation’s healthy product pipeline. MDVN is currently in several late-phase clinical trials to test the efficacy of Xtandi for multiple stages of prostate cancer and for breast cancer.
Over the long run, Medivation aims to build a portfolio of four to six product candidates. MDVN is also actively seeking partnerships with other drug and medical device developers. I’m looking forward to seeing where Medivation goes with this.
One thing to keep in mind is that MDVN is an aggressive-ranked stock, and this class of stocks shouldn’t exceed 10% of your portfolio. While I’m bullish about Medivation’s long-term prospects, aggressive-ranked stocks tend to move more quickly to the upside during good times and to the downside during downtimes.
Please keep this in mind as you add MDVN, which has a “buy” rank.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.