Dumpster Diving/ Stocks

[Qs Laptop]

My total appreciation not counting dividends for LLY is 1,136.52%. I don’t expect PFE to come close to that over the next 10-12 years.

That is fantastic! Lilly also has other promising drugs in the works. It's likely going to become the first $1 Trillion market cap pharmaceutical company.

I'm up 28% since I bought on Dec 7th. Annualized that would be 140%.

 

[dunkelblau]

Goodness, you are investing on the basis that a beaten down stock will eventually achieve price appreciation because given enough time it will revert to it's mean?

So you are investing based solely on how a company's chart looks compared to another one, with no regard to the products it markets, the demand for such products, etc. Just, hey, they're in the same industry and eventually their charts are going to correspond?

LLY happens to have the most disruptive drug in the world right now, Zepbound, which is the weight loss drug. They also have Mounjaro which treats diabetes. Based on demand, they are building a new $2.5 Billion facility in Germany to keep up with demand for these drugs. What does Pfizer have in their pharma pipeline that is going to remotely approach the demand and sales that Eli Lilly has with these drugs?

My thinking is that mean-reversion is highly unlikely for companies with certain financial metrics, but it's more likely for established companies with long track records that include some successes in the past. Someone had mentioned here that biotech and pharma stocks are usually hard to predict (a point I personally strongly agree with), so I like to shop the discount bin for these. In my experience most of these contrarian bets do not work well, but those that do sometimes work spectacularly well, so a decent mean makes up for an ugly median. What I see in the price history chart is a trajectory of investor sentiment, and it seems to me certain names such as LLY, NVDA, SMCI, etc have especially high expectations today. My guess is that in 2011 few investors foresaw LLY's long-term prospects, and that something similar might be happening to PFE today. That's my bet anyway.

 

[Qs Laptop]

My thinking is that mean-reversion is highly unlikely for companies with certain financial metrics, but it's more likely for established companies with long track records that include some successes in the past.

My guess is that in 2011 few investors foresaw LLY's long-term prospects, and that something similar might be happening to PFE today. That's my bet anyway.

So you don't do any research into the companies product pipeline, don't read any earnings reports, just look at price charts and market capitalization?

 

[Al18]

T is another stock that looks like a value trap. They were on a Dividend Aristocrat until 2022 when they divested WBD and cut their dividend in half. Their dividend is high again, but I wouldn’t trust it

 

[dunkelblau]

So you don't do any research into the companies product pipeline, don't read any earnings reports, just look at price charts and market capitalization?

That's right, I don't have the background to be able to judge the opinions in analysts reports about biotech/pharma pipelines, so I usually focus on the statistics page on Yahoo Finance to kick out what I see as likely serial diluters among the small caps. Among the bigger names I assume these companies that have grown strongly at times over multiple decades will somehow survive what I presume will be temporary setbacks.

I bet presuming that I have more patience than most investors, so I'm willing to take on what those who are looking for quick gains want to redeploy their capital out of. FWIW most of my buy orders for small caps fill when a surprise bit of bad news hits -- and if the company involved has what looks like a large cash buffer, I'll take the chance that something will turn up for them before their cash runs out and serial dilution begins. Halloween 2023 was a good time to shop this space; I see a much higher percentage of significant bounces so far than I expected. I imagine much of this recent share price action is fueled by acquisition speculation.

 

[Chuckanut]

John Templeton famously bought 100 shares of every stock selling below 1$ a share. Many of them went bust. But, he made a fortune on the ones that ended up doing well. Maybe the OP can do as well today?

https://www.nasdaq.com/articles/lessons-sir-john-templeton-2017-04-07

In 1939, Templeton made a large $10,000 bet on stocks trading on the New York Stock Exchange by buying every stock trading under $1 (104 equities). Near the end of the war, he sold the stocks for around $40,000.

 

[Qs Laptop]

T is another stock that looks like a value trap. They were on a Dividend Aristocrat until 2022 when they divested WBD and cut their dividend in half. Their dividend is high again, but I wouldn’t trust it

T, which is AT&T, is the classic example of chasing dividends at the expense of growth. Three years ago their stock price was $22, now it's $16.60 (they are not having a good day, what with the service outages.)

Basically, you could lose money while getting a 6.5% annual dividend.

 

[aja8888]

T, which is AT&T, is the classic example of chasing dividends at the expense of growth. Three years ago their stock price was $22, now it's $16.60 (they are not having a good day, what with the service outages.)

Basically, you could lose money while getting a 6.5% annual dividend.

T and VZ are both dead money. They are like utilities with bad management.

 

[bobandsherry]

T, which is AT&T, is the classic example of chasing dividends at the expense of growth. Three years ago their stock price was $22, now it's $16.60 (they are not having a good day, what with the service outages.)

Basically, you could lose money while getting a 6.5% annual dividend.

To be fair, within that 3 year window, T spun off the interest in WarnerMedia in April 2022, so you'd have to include that value in your $16.60 current price. WBD has been a disappointment for sure down 60% since then.

 

[ownyourfuture]

LLY happens to have the most disruptive drug in the world right now, Zepbound, which is the weight loss drug. They also have Mounjaro which treats diabetes. Based on demand, they are building a new $2.5 Billion facility in Germany to keep up with demand for these drugs. What does Pfizer have in their pharma pipeline that is going to remotely approach the demand and sales that Eli Lilly has with these drugs?

I have to thank my lucky stars for having 350 shares of LLY.
Bought them in different lots in 2011-2012
Don't even remember why ?
I also did something that turned out to be smart/lucky when I decided not to participate in the Elanco spinoff.

The problem (a good one to have) is that my 350 shares now account for 24% of my taxable account at Fidelity. For that reason, I recently sold 1 January 2025 $940 covered call.

 

[target2019]

I need to find the next NVDA in healthcare.

 

[Al18]

I need to find the next NVDA in healthcare.

That’s a tough battle. So far, Rite Aid RADCO filed for bankruptcy and Walgreens WBA was just dropped from the SP500. CVS is in the fight, along with Amazon AMZN

 

[target2019]

That’s a tough battle. So far, Rite Aid RADCO filed for bankruptcy and Walgreens WBA was just dropped from the SP500. CVS is in the fight, along with Amazon AMZN

Thanks, No meteoric over-achievers there!

Maybe I should look at samll bio-pharm's?

 

[Qs Laptop]

I need to find the next NVDA in healthcare.

Good luck with that. There are many, many hurdles to bring a product to market in health care. There are no shortages of microcap companies making wild claims about the efficacy of their product and are trying to get FDA approval. I would guess the pharmaceutical and biotech sectors have the highest small company failure rates in the world.

This might be one instance where buying penny stocks in 100 small biotech companies might work, if there weren't so darn many of them.

 

[target2019]

Pray and spray? Lol!

I'm gonna ask my CPA...

 

[tutan]

Good luck with that. There are many, many hurdles to bring a product to market in health care. There are no shortages of microcap companies making wild claims about the efficacy of their product and are trying to get FDA approval. I would guess the pharmaceutical and biotech sectors have the highest small company failure rates in the world.

.

+1
I think you have a better chance with tech companies. It doesn’t have to be a moonshot or a 10 bagger for me. I like large cap companies that have long passed their IPO stage but still have growth prospects. Got a few shares of aapl in 2007, a few amzn in 2017 with a few thousand dollars lying around.

 

[maestro]

I remember the 'irrational exuberance' of the dot com boom in late '90s. History repeating again with overvalued 'techs', index and ETF funds 'overfunding', and anything else breathing AI. No thanks. "Give me oil, or give me death." Since many are talking their portfolio stars, I go "EPD" and "ET". Movers of energy, crazy dividend rates, not going away. Peace.

 

[Montecfo]

I remember the 'irrational exuberance' of the dot com boom in late '90s. History repeating again with overvalued 'techs', index and ETF funds 'overfunding', and anything else breathing AI. No thanks. "Give me oil, or give me death." Since many are talking their portfolio stars, I go "EPD" and "ET". Movers of energy, crazy dividend rates, not going away. Peace.

I hear you but the dotcom was nothing like this. Those stocks had no real fundamentals and in some cases very little real business.

The tech high fliers now have strong dominant growing businesses.

But like you I do like the value stocks also-barbell.

 

[RS7-63]

I bought $10,000 Pfizer a week or so ago. The dividend yield around 6.2%.

Seems like a solid, safe, conservative hold for the next 10-15 years.

I picked up 1600 shares of PFE last week. I'm parking some $$$ for the dividend. It's currently an undervalued stock so hopefully it has some good growth potential.
I also bought ET, EPD, MPLX, BMY, & VALE for the dividends. I like to stick with large multi-billion dollar market cap companies.

 

[target2019]

The payout ratio of PFE is close to 90%. They must have transformed to a REIT while we weren't looking. /s

How safe is the dividend?

 

[Surewhitey]

We were just talking about PFE the other day and picked up a few hundred shares for fun... Hopefully a good bet.

 

[Surewhitey]

The payout ratio of PFE is close to 90%. They must have transformed to a REIT while we weren't looking. /s

How safe is the dividend?

But taxed differently... I suspect there's a bit of a hangover from Covid vax's. I'm hoping for a weight loss drug announcement in the next year or so since everyone is doing it...

 

[olyveoil]

I don’t dumpster dive for stocks or bonds - seems like gambling and I don’t gamble with my investments. If you want a good dividend payer, the Dividend Aristicrats NOBL and Schwab’s SCHD are a good choice.

PFE payout ratio is 61.58% according to https://www.dividend.com/stocks/health-care/biotech-pharma/large-pharma/pfe-pfizer/

I would not buy a dividend payer with greater than 50%, because it doesn’t seem sustainable.

I own SCHD.
Your payout ratio stance is a little myopic.
Some of SCHD top holdings:
AVGO -- 54% payout ratio
ABBV -- ~200%
MRK -- ~1,000%
VZ -- 95%
KO -- 74%

I also own MRK and ABBV. Bought them at dumpster dive type prices.

 

[target2019]

Payout ratio for ABBV is listed as 53.92% on SeekingAlpha. Much less than 200%.

 

[olyveoil]

Payout ratio for ABBV is listed as 53.92% on SeekingAlpha. Much less than 200%.

Probably is. CS looks at TTM.
Either way it is in SCHD and is greater than 50%.