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Merck an Unhealthy Stock to Sell

By: Sam Collins
Posted: 3/30/2011 5:00:00 AM
Referenced Stocks: MRK

Merck & Co. (NYSE: MRK ) - Following a major advance in the stock market, investors should review their holdings and cull out non-performers that are inhibiting overall portfolio profits. Despite being a global health care company, MRK is one of those stocks to sell.

Not only is the stock still in a bear trend, but the past five years have averaged a negative earnings growth of about 33%, and current profit margins are at a mere 1.87% in an industry that averages in the teens.

About a month ago, TD Ameritrade cut their opinion of MRK to "reduce," and we agree. Even though the dividend yield is at 4.7%, there is no assurance that it will stay at that level, and an increase in bond interest rates would bring in sellers who have held this stock as a "bond substitute."

Sell MRK at the market.

Trade of the Day - Merck & Co. (NYSE: MRK) Chart

Trade of the Day Chart Key

If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net .