Denmark'sNovo Nordisk (
), the world's top producer of diabetes drugs, has offered steady
capital gains and a dividend too.
The stock has quadrupled from its low in April 2009 and is
currently in the sixth week of a cup-type base. The pattern is
second stage, which gives it a better chance of success than a
Novo has recovered from a 9% drop Nov. 6, when the Food and
Drug Administration warned of possible heart problems with its
new long-acting insulin drug degludec, also known as Tresiba. But
an FDA advisory panel later recommended that degludec be
approved, boosting the stock back up to its 50-day line.
More than 70% of Novo Nordisk's revenue comes from drugs to
treat diabetes, which afflicted 366 million people worldwide last
Novo was ranked No. 23 in Wednesday's IBD 50. Its annualized
dividend of $1.83 per share is good for a yield of 1.1%. That's
lower than the 2.1% average dividend yield for the S&P 500.
However, Novo's stock is up almost 40% this year, well ahead of
S&P's 12% gain. Novo boasts a best-possible 99 Composite
Rating, tops in the 40-member Medical-Ethical Drugs industry
Profits have picked up for two straight quarters, rising from
11% in Q1 to 18% and 34% in Q2 and Q3, respectively. Sales have
also accelerated, from 6% to 7% and 15%.
Meanwhile, institutional investors have increased their
holdings of Novo's shares for four straight quarters. The stock's
B- Accumulation-Distribution Rating and 1.3 up-down volume ratio
confirm that demand for the shares is still growing.
Yet Novo is struggling somewhat after clearing resistance at
its 50-day line. Volume has been light as it forms the right side
of its base.
On Wednesday, Moody's upgraded Novo's long-term corporate
credit rating to A1 from A2. The upgrade "primarily reflects that
Novo Nordisk has strengthened its financial profile over recent
years, while also maintaining its leadership position in the
diabetes care market," it said, adding that Tresiba will likely
help Novo to "further protect and develop its insulin
Tresiba has been approved in Japan. U.S. and European
approvals are pending.