Jonathan Yates, Benzinga Staff Writer
Pharmaceutical stocks are excellent holdings in times of a downturn.
Health care is the largest component of the American economy, about one-sixth the gross domestic product. For income, value, and growth investors, respectively, there are GlaxoSmithKline (GSK), Pfizer (PFE), and CytoDyn (CYDY).
Income stocks always hold up well in a correction.
Investors seek the safety of the dividend component. Big Pharma is especially good at providing a steady stream of dividend income, not matter what the market conditions.
GlaxoSmithKline excels at this with a dividend yield of 5.73 percent at a time when the average for a member of the Standard & Poor's 500 Index (SPY) is under 2 percent. For long term investors, there is a history of dividend growth, too.
Value investors from the Warren Buffett school should be pleased by the return-on-equity of Pfizer.
Buffett has stated that he looks for companies with a return-on-equity of over 20 percent. The return-on-equity for Pfizer is 52.60 percent. Bolstering the total return for Pfizer is a dividend yield of 3.48 percent.
While both are excellent companies, growth investors will have to look elsewhere other than Pfizer, GlaxoSmithKline, and other Big Pharma stocks.
CytoDyn and other small caps is where growth should come. With promising products in the drug pipeline, companies like CytoDyn have the most upside for investors looking for growth in the drug sector.
CytoDyn is developing the PRO 140, a self-administered injection product that could give HIV patients a much-needed "drug holiday," which could do wonders for their body, mind, and spirit.
Even if a correction does not ensue, Pfizer, CytoDyn, and GlaxoSmithKline all have much to offer value, growth, and income investors.
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