Last Year’s Top Performer Looks to Repeat

Momentum is on its side [View in browser]( BROUGHT TO YOU BY: Proprietary Data Insights Financial Pros Top Big Pharma Stock Searches in the Last Month Rank Name Searches #1 Pfizer 1,885 #2 Merck & Co. 1,386 #3 Eli Lilly and Company 1,285 #4 Johnson & Johnson 887 #5 Novartis AG 445 #ad [Don’t Drink the Kool-Aid, Sip on The Juice…]( Brought to you by [The Tomorrow Investor]( [Tiny Microcap With A Unique Solution To Soaring Wheat Costs]( The war in Ukraine has had a big impact on the world's #1 wheat exporter, reducing the country's wheat crop by 33%... Record high inflation is only heightening the issue, as prices at the grocery store continue to climb... And as a result, wheat prices have nearly doubled in less than 12 months. It's a crisis of monumental proportions ...But it's also a tremendous investment opportunity. A $160 Billion Opportunity for Investors Get [The Full]( Report Now. Healthcare Last Year’s Top Performer Looks to Repeat The Dogs of the Dow is a trading strategy where you buy the 10 stocks with the highest dividend yields in the Dow Jones Industrial Average. The strategy outperformed the overall market in 2022, and some believe it will again this year. One of the new Dogs on this year’s list is Merck (MRK), a stock that consistently draws more than 1,000 searches each month, according to our Trackstar database. It was the top-performing Dow 30 stock last year and has an impressive portfolio of treatments, with Keytruda leading the pack at $5.4 billion in sales in Q3 2022. Financial pros may also like MRK because of its relatively low valuation, strong cash flow, and vast pipeline. Will MRK continue to outperform? Merck’s Business Merck is a global drug manufacturer that develops and sells a wide range of pharmaceutical products. Some of its top-selling drugs include Keytruda for cancer, the Gardasil HPV vaccine, Januvia for diabetes and obesity, Janumet for diabetes and obesity, and the Varivax varicella (chickenpox) vaccine. [Revenue] Source: Merck It boasts a massive pipeline with 82 programs in phase 2 clinical trials, 30 in phase 3, and three under review with regulatory authorities. The company’s sales consist of pharmaceutical products, vaccines, and animal health products. It segments its business into Human Health and Animal Health. [Performance] Source: Merck Financials [Financials] Source: Stock Analysis Merck’s debt-to-free-cash-flow ratio has declined substantially over the years, going from 5.3x in 2017 to 1.9x over the last 12 months. Meanwhile, its current ratio has improved from 1.1x in 2018 to 1.4x over the last 12 months. The company has delivered 12 years of dividend growth and pays investors an annual dividend of $0.73 per share. Merck has a net operating cash flow of $19.7 billion, so it’s easy to see why Wall Street loves this stock. In fact, Wall Street titans like Jim Simons, Ken Griffin, and Ray Dalio have nine-figure positions in MRK. Valuation [Valuation] Source: Seeking Alpha Over the last five years, MRK has averaged a P/E GAAP ratio of 36.1x. It now trades at 19.0x. That’s middle-of-the-road among its peers. For example, Pfizer (PFE) and Novartis (NVS) are cheaper at 9.8x and 9.4x, and Eli Lilly (LLY) and Johnson & Johnson (JNJ) are noticeably higher at 54.6x and 25.1x. Merck’s price-to-sales ratio of 4.9x is about the same as JNJ. It’s above MRK’s five-year average of 4.3x and higher than PFE at 2.9x and NVS at 3.9x, but below LLY at 11.2x. Some analysts worry Merck’s earnings-per-share growth estimates are slightly below the industry average through 2027. But others believe Keytruda’s optimistic data on treating non-small cell lung cancer is an incredible opportunity to prolong franchise growth beyond the drug’s 2028 exclusivity deadline and drive significant sales for the company. Profitability [Profitability] Source: Seeking Alpha Merck’s Keytruda, Lynparza, Lenvima, and Reblozyl were responsible for nearly 40% of the company’s total revenue, as it continues to be a force in oncology. The company’s net income margin is 25.9%, higher than LLY at 20.6% and JNJ at 20.0%, but lower than PFE at 29.8% and NVS at 41.7%. MRK has a strong EBIT margin at 34.5%, better than LLY at 30.1%, NVS at 27.2%, and JNJ at 26.0%. Only PFE is higher at 40.0%. Growth [Growth] Source: Seeking Alpha Merck’s revenue growth has been outstanding relative to its peers over the last five years. Its five-year average of 8.2% is above LLY at 5.4%, NVS at 1.1%, and JNJ at 5.3%, though PFE has been even more impressive at 13.7%. Keytruda sales growth was up 29.1% from Q3 2021, which significantly boosted Merck’s revenues. The company had YoY EBITDA growth of 43.6%, compared to LLY at 7.1%, NVS at 4.5%, JNJ at 0.6%, and PFE at 66.3%. [Don’t Miss These 3 Investment Trends for 2023]( "Inflation is out of control. The Fed plans to hike rates until we’re all in the poorhouse. And there’s a recession right around the corner… But you don’t have to settle for doom and gloom. In this free exclusive report, we dive into three key investment trends – and our top recommendations to play them to grow your wealth. " [Go here to learn where to put your money for 2023 and beyond.]([Ad] Our Opinion 9/10 MRK was one of the top-performing stocks in 2022. Over the last five years, it returned 146.8%. Despite share prices rising, the company is relatively cheap compared to its five-year average P/E ratio. It continues to succeed in drug trials and receive new approvals, along with its existing all-star portfolio of treatments. We rate Merck a buy and believe there’s further upside from here. News & Insights Just Spilled - [A Better Way to Play Gold]( - [You Need to Know About Alternative Investments]( - [An ETF With a One-Two Punch]( - [A Stock at the Forefront of the Richcession]( [We want to hear from you! Let us know your thoughts by clicking here]( [Article Link]( [Link]( # [submit to reddit]( [submit to reddit]( [submit to reddit]( [submit to reddit]( To ensure delivery of all emails, [allow us on your list]( Spill&email=TheSpill@news.investingchannel.com). Update your email preferences or unsubscribe [here](. Manage your subscriptions with our [preference center](. View our privacy policy [here](. Copyright ©2023 InvestingChannel. All rights reserved. 1325 Avenue of the Americas, Floor 27 & 28 New York, New York 10019 Disclaimer: This is not investment advice. This InvestingChannel, Inc., newsletter is for information purposes only and is based on opinion. 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