Important Updates for Investors
Carla Pasternak's Premiere Issue of High-Yield International Just
Released
Income expert Carla Pasternak's debut issue of High-Yield
International covers a Taiwanese manufacturer yielding 9.5%... a
rare Mexican monopoly yielding 13.4%... and other top-performing
investments yielding up to 19.0%.
Government's Biofuel Timetable Could Spell +15,900% Growth
+15,900% growth might seem far-fetched... but it's not. In fact, it
is mandated by law. And I've identified the ONLY stock positioned to
capture this growth.
The
Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income
investors. This massive spending, combined with movement out of U.S.
Treasuries, is going to take its toll on the dollar, and
international income investors could reap the rewards in the form of
higher dividends. |
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A Cash-Rich Blue Chip With Growth Potential |
Published:
January 12, 2009
Bristol-Myers Squibb (NYSE: BMY, $22.35 ) -- This major
pharmaceutical company develops, manufactures, and markets drugs
worldwide. The blue-chip company is a member of both the S&P 100
and 500 indices.
BMY holds patents on blockbuster drugs in different healthcare
areas. Some of its key segments are cardiovascular, virology
(HIV-AIDS), oncology and psychiatric disorders. Plavix, which
prevents blood-clotting, had +15% sales growth in the third
quarter of 2008 compared to the same period of 2007. Abilify, a
psychiatric drug which treats bipolar disorder, had +34% sales
growth in that same timeframe.
Between January 2002 and October 2007, the company paid $0.28
per share quarterly or $1.12 a year. In January 2008, the
quarterly dividend was raised to $0.31 a share or $1.24 yearly.
At current prices, BMY is yielding close to 6% ($1.24/$22.35).
For the third quarter of 2008, the company increased sales by
nearly +17% from the comparable year-ago period, but earnings
from continuing operations were down marginally from $0.99 to
$0.98. Bristol recently reaffirmed full-year guidance of $1.65
to $1.70 per share. For 2009, the median consensus estimate of
14 analysts is $1.98, which if correct, would represent roughly
+15% earnings growth from 2008.
Bristol is on a campaign to boost profits by lowering operating
costs by approximately $2.5 billion. As part of this effort, it
is aiming for roughly a 20% workforce reduction. In July, 4,300
employees were terminated and in December another 800 were laid
off.
At the end of September, BMY had a cash horde of $7.4 billion on
its balance sheet. Recently it sold its share of cancer-fighting
company ImClone, now a subsidiary of Eli Lilly (NYSE: LLY), and
raised another $1 billion. Early in the new year, it plans to
spin off roughly 15% of subsidiary Mead Johnson, a nutritional
company and maker of Enfamil.
That spin-off will raise more than an additional $1 billion. By
early 2009, Bristol is expected to have almost $10 billion in
cash on the balance sheet. That compares to roughly $6 billion
in debt which has an average maturity of 21 years. This cash
balance could allow Bristol to make acquisitions or potentially
even become a takeover candidate.
A threat to Bristol is that some of its key drugs will lose
patent protection between 2011 and 2012, thus opening it to
generic competition. In fact, Plavix has already lost patent
protection in Germany. This threat should be offset by the more
than 50 drugs that BMY currently has in development.
Action to Take -->
For 2009, analysts estimate BMY will earn between $1.91 and
$2.08 per share. Even if Bristol were to hit the low estimate,
the dividend payout ratio would be a very sustainable 65%. While
the company could possibly run into trouble covering the
dividend in 2011, if it is not able to replace revenues from
blockbusters at that time, that is still more than two years
away.
Good investing![http://www.streetauthority.com/includes/editor-profiles-hy.htm]
Disclosure: Carla Pasternak
does not own shares of BMY.
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