It’s time to aim for profits in a Pennsylvania-based pharmaceutical company that provides leverage to, along with a hedge against, the pandemic, suggests Tony Sagami, editor of Weiss Ultimate Portfolio.
West Pharmaceutical Services (WST) designs and makes packaging and delivery products for injectable medicines. It has partnered with pharmas and biotechs all over the world to help combat COVID-19.
And while these partnerships have helped give its bottom line a boost, that’s just a small part of its business … which continues to grow. Let's get on board for that growth.
With Delta variant cases on the rise — and in some places reaching new peak levels — West Pharmaceutical Services has seen incredible demand for its products related to COVID-19 vaccines.
Net sales have increased 37% year over year in Q2. In its recent earnings announcement, WST grew organically at a rate of 31%, and management raised revenue and earnings guidance. And with more money being spent to curb the pandemic’s resurgence, I expect sales to continue rising substantially.
But once the virus is finally contained, this company isn’t going anywhere. In fact, it’s been around almost a century. Herman O. West and J.R. Wike founded the company in Philadelphia in 1923, and was soon tapped by Josiah Lilly to help his family’s firm — you guessed it, Eli Lilly & Co. (LLY) — develop sterile packaging for medicine delivery.
Since then, West has made all kinds of rubber components to ensure the safe delivery of insulin, penicillin, Novocain, you name it. Even if it isn’t necessarily a household name, it might have made something that’s in your medicine cabinet right now!
It wasn’t until 1970 that WST went public. But it’s come a long way since it debuted at $15 per share. Just over the past year, the stock has gone up some 62%, and signs are indicating a run even higher.
Now, nobody wants to see COVID-19 cases climbing again, but the reality is that many parts of the globe are seeing the worst of the pandemic hit now. You can bet there will be more preventative measures set in place — measures that will benefit health care companies like West.
Plus, at one point during the pandemic, the Centers for Disease Control and Prevention (CDC) estimated that some 40% of people chose not to seek treatment or routine healthcare. This means that many conditions — that could have been caught earlier — are being diagnosed late and will be more complicated to treat.
That likely means more people needing more drugs — and this company is uniquely positioned to help get those treatments into hospitals and pharmacies and, ultimately, to the people whose well-being depends on them.
Those are likely just a few reasons why WST tops my model’s list of stocks. And that’s also part of the reason why the Weiss Ratings rate it as a solid “Buy.”
