Quantcast

Zacks Value Investor Highlights: Gilead Sciences, Biogen, Celgene, Lannett and Valeant


Shutterstock photo

For Immediate Release

Chicago, IL - June 15, 2018 - Zacks Value Investor is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here: ( https://www.zacks.com/stock/news/307717/drug-stocks-the-next-hot-industry-or-value-traps )

Drug Stocks: Next Hot industry or Value Traps?

Welcome to Episode #96 of the Value Investor Podcast.

Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio service , shares some of her top value investing tips and stock picks.

Recently, investors on Stocktwits and Twitter have been asking about some of the drug stocks.

If you look at the valuations, you can see why.

Many are dirt cheap, with some trading with single digit P/Es.

Problem is, the Street hates them (which makes them perfect for value investors.)

Retail and energy stocks were hated over the last several years too but have staged big turnarounds in 2018.

Will the drug stocks be the next big turnaround success story?

Definition of a Value Trap

Remember, a value trap is a stock that looks cheap based on basic value fundamentals like the P/E ratio.

Who doesn't like a company trading at 5x earnings?

But sometimes there's a reason for the cheapness. Investors have to look beyond the value fundamentals at earnings.

Are they rising or falling?

Rising earnings with a low P/E tells you that something right is going on at a company. But an earnings decline can be a sign that the company has lost its way.

Value Stock or a Trap?

1.       Gilead Sciences GILD has a forward P/E of just 11.8. Shares are down 13.3% over the last 2 years while the S&P 500 has gained 34.5% in that time. What are the earnings expected to do in 2018?

2.       Biogen BIIB is trading with a forward P/E of 12.9. Year-to-date, the shares are down 8.4% but they've gained 28.5% over the prior 2 years. Estimates for 2018 have been cut in the last 60 days, but is there earnings growth?

3.       Celgene CELG has taken a beating this year with shares falling 27% year-to-date. It's now trading with a forward P/E of just 9.2. That's cheap. But is it a trap?

4.       Lannett LCI is the cheapest among this group. It has a forward P/E of only 5.3. Should you take a chance? Shares are down 31% year-to-date and have fallen 35% the prior 2 years.

5.       Valeant VRX has had its problems the last few years but the shares have rebounded in 2018 and are up 22% compared to the S&P's return of 3.4%. It's also cheap, with a forward P/E of just 8. Is this the bottom of the earnings decline?

There are lots of categories in the healthcare sector including the insurers, hospitals, device manufacturers, staffing and others.

But the drug companies have been hit especially hard.

Just because they're cheap, however, doesn't mean they're a good buy. Investors need to do their homework.

Value stock or a trap?

Find out on this week's podcast.

Wall Street's Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It's a once-in-a-generation opportunity to invest in pure genius.

Click for details >>

Zacks Restaurant Recommendations:  In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec and she also hosts the Zacks Market Edge Podcast on iTunes.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time!   Click here for your free subscription to Profit from the Pros .

Follow us on Twitter:  https://twitter.com/zacksresearch

Join us on Facebook:  https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

https://www.zacks.com/performance

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance  for information about the performance numbers displayed in this press release.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Gilead Sciences, Inc. (GILD): Free Stock Analysis Report

Celgene Corporation (CELG): Free Stock Analysis Report

Biogen Inc. (BIIB): Free Stock Analysis Report

Valeant Pharmaceuticals International, Inc. (VRX): Free Stock Analysis Report

Lannett Co Inc (LCI): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Stocks
Referenced Symbols: GILD , CELG , BIIB , LCI



More from Zacks.com

Subscribe






Zacks.com
Contributor:

Zacks.com

Equity Research










Research Brokers before you trade

Want to trade FX?