It's Time to Buy Big Pharma

The sector is historically cheap... [Wealthy Retirement]( SPONSORED [SHOCKING: $100 Billion Surging Into the 5G Market]( [Closeup $100 Bills]( What do Verizon, AT&T, T-Mobile, Dish Network, Charter Communications and Comcast have in common? According to Barron's, they're all participating in "secret bidding" to secure as much as $100 billion worth of 5G spectrum. The big winner in all of this frenzied spending? This little-known tech stock, which trades for less than $20 a share. [Get the scoop here...]( Editor's Note: Below, Contributing Analyst Jody Chudley lifts the hood on Big Pharma. The pharmaceutical industry stunned the world with its lightning-fast response to the COVID-19 crisis - and now it's poised for even bigger things in the years ahead... That's because the technology behind these lifesaving vaccines has the ability to fight a host of other conditions, including cancer. And one biotech company in particular will profit from this revolution in how we fight disease. Its team includes a Nobel Prize contender and a CEO who's been preparing to fight a global pandemic for years. To learn more about this history-making company - and four other all-stars of the biotech space that Chief Income Strategist Marc Lichtenfeld expects to profit in the coming years - [click here](. - Mable Buchanan, Managing Editor [BIOTECH INVESTING]( Why Now Is the Time to Buy Big Pharma Jody Chudley, Contributing Analyst, The Oxford Club [Jody Chudley] Pharmaceutical companies have successfully produced effective COVID-19 vaccines with astounding speed. They achieved the very best-case scenario. Given how front and center these companies have been over the past year, you would think investors would have some love for them. Strangely, that is not the case. The MVIS US Listed Pharmaceutical 25 Index currently trades at the biggest discount to the S&P 500 that we have seen in 20 years. While the S&P 500 trades at a rather expensive 22 times projected 2021 earnings, Big Pharma trades at just 13 times projected 2021 earnings. That is a big discount. The [pharmaceutical sector]( trades at one of the lowest valuations of any group in the market. The last time the sector was this cheap in absolute terms was 2011. Not coincidentally, 2011 was a great time to be a buyer of these stocks. From 2011 through the middle of 2015, pharma stocks doubled the performance of the S&P 500. As per usual, investors who paid attention to value were well-rewarded. [The Last Time Pharma Stocks Were This Cheap, It Paid to Be a Buyer]( Now the pharma sector is cheap again. Since that great pharma run that ended in 2015, the stock prices of these companies have badly trailed the market... SPONSORED [Gold Chart]( you own gold?]( Somebody recently decided to buy a lot of it... And I think I know why. [Click here for details on a brand-new way to invest in gold.]( While the S&P 500 has almost doubled since 2011, the pharma sector hasn't done anything. [From Hot to Not, Pharma Stocks Have Lagged For Years]( In fact, since mid-2015, the pharma sector is actually down slightly. After widely outperforming from 2011 to 2015, the sector was no longer cheap - [it was expensive](. The performance from 2015 onward has been the product of an expensive starting point. Now, after the sector underperformed for almost six years, these stocks are cheap again. Now is the time to be a buyer again... Someone Else Has Noticed the Value in Pharma Stocks Without a lot of fanfare, the Oracle of Omaha himself has started putting some money to work in the pharma sector. As of his last required reporting date of December 31, 2020, Warren Buffett's Berkshire Hathaway (NYSE: [BRK-A]( owns more than $7 billion worth of stock of three Big Pharma companies. The companies are Merck & Co. (NYSE: [MRK]( AbbVie (NYSE: [ABBV]( and Bristol Myers Squibb (NYSE: [BMY](. Buffett has been steadily accumulating shares of these companies since the third quarter of 2020. Normally, Buffett makes large, concentrated bets on individual stocks. The fact that he has spread this bet across three companies shows that he thinks the entire sector represents good value. An obvious way to play the value in this sector is to jump on Buffett's coattails and buy the same three stocks. All three are very cheap relative to their expected 2021 earnings. AbbVie trades for less than nine times what it is expected to make this year. Bristol Myers Squibb trades for barely more than eight times earnings, and Merck trades for just more than 11 times earnings. For perspective, that means all three companies trade for half the valuation of the overall market. They come with big [dividends]( too... AbbVie yields 4.8%, Bristol Myers Squibb yields 3.2% and Merck yields 3.5%. So these three stocks have Buffett's stamp of approval, very cheap valuations and big dividend yields. That is a lot to like... but there's more. These companies have great balance sheets that are loaded with cash and carry little debt. That gives them dry powder to scoop up smaller, faster-growing biopharma businesses that can add to their revenue-generating drug portfolios. In a market where so many stocks are looking very expensive, this sector represents good value. Good investing, Jody P.S. Marc thinks the technology that pharmaceutical companies used to manufacture effective vaccines in record time could save 10 million lives over the coming years. And Marc's [#1 biotech for 2021]( could see a 50-fold revenue spike this year alone as a result. [Click here to learn more about Marc's favorite biotech.]( [Leave a Comment]( MORE FROM WEALTHY RETIREMENT [Downgrading Icahn's 15% Yield]( [A Powerful Profit Generator]( [Have COVID-19 Vaccines Shifted the Pharma Pricing Debate?]( [Facebook]( [Facebook]( [Twitter]( [Twitter]( [Email Share](mailto:?subject=A%20great%20piece%20from%20Wealthy%20Retirement...&body=From%20Wealthy%20Retirement:%0D%0A%0D%0AThe%20sector%20is%20historically%20cheap...%0D%0A%0D [Email Share](mailto:?subject=A%20great%20piece%20from%20Wealthy%20Retirement...&body=From%20Wealthy%20Retirement:%0D%0A%0D%0AThe%20sector%20is%20historically%20cheap...%0D%0A%0D SPONSORED [2021: The Year of Stockflation?]( $11.2 TRILLION is about to unleash the biggest force to ever hit the market... But three new initial public offerings could reap the fastest gains... [Get the Details Here]( [The Oxford Club]( You are receiving this email because you subscribed to Wealthy Retirement. 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