Big Pharma is Taking Off… Are You on Board?

Most of my subscribers are probably sick of it by now…

 

Early this year, I recommended taking a large position in giant drug companies like Pfizer, Merck, and Johnson & Johnson. Back then, this sector (popularly known as “Big Pharma”) had just about everything NOT going for it…

 

First it was Merck and the Vioxx scandal. Then came Pfizer and problems with Celebrex...then ordinary painkillers such as Advil and Tylenol were called into question.

 

Once the pain killer rug was pulled out from underneath the pharmaceutical companies, it was time to target statins...

 

First it was bad news for AstraZeneca's Crestor...followed by worries about Pfizer's Lipitor and Merck's Zocor... Pravacol, made by Bristol-Meyers Squibb, has cause for concern as well.

 

And like clockwork, lawyers came out by the hundreds to sue these companies. After all, what self-respecting class action attorney isn't going to drool over headlines like "Doctor Says Vioxx Can Cause Heart Attacks"?

 

Given all this negative sentiment and historically cheap valuations, I’ve repeatedly told my subscribers that this sector is going to be one of the most profitable places to have your money for the next few years…

 

And given the action of the past few weeks… this trend is starting to pick up steam. Just look at how the Pharmaceutical ETF has performed over the past two months:
 

 

While the S&P 500 is down 1% and the Nasdaq Composite Index is 7% lighter, the Pharmaceutical HOLDRs Trust (PPH) is actually up 6%!

 

That impressive performance is largely attributable to the exchange-traded fund’s large positions in stocks like Johnson & Johnson (JNJ), Abbott Laboratories (ABT), and Merck (MRK). These stocks, which have vastly underperformed the market over the past three years, have finally bolted into leadership mode.

 

The impressive performance of the pharmaceutical sector over the past two months is just a small taste of what we’re going to see over the next year or so.

 

So if you’re not exposed to this sector, then do yourself a favor and get exposed. And keep reading the Growth Stock Wire for updates…

 

Best Regards & Good Trading,

 

Jeff

• If You’re Listening, Then You’re Buying
  By Jeff Clark Thursday, July 27, 2006
  
• The Difference Between a Duncan and a Lay
  By Graham Summers Wednesday, July 26, 2006
  
• The Question for Today is: Will it Hold?
  By Jeff Clark Tuesday, July 25, 2006
  
• What The Insiders Are Saying About Lowe's
  By Graham Summers Monday, July 24, 2006
  
• Another Buy Signal For Biotech...
  By Rob Fannon Friday, July 21, 2006