With investors taking a risk-adverse posture, our Undervalued category is swelling with a greater variety of Select Blue Chips than we have seen in years, observes Kelley Wright, editor of Investment Quality Trends — and a participant in The Interactive MoneyShow Virtual Expo, July 26-28. Register here for free.
As value seekers this provides us an opportunity to consider companies that have not offered good present value for a considerable period.
Novartis AG (NVS) and Philip Morris International (PM) have earned a spot in the Timely Ten based on their internal cash flow measures and the fact that they are now within their Undervalued boundaries. Our Timely Ten represents our top current investment ideas.
Novartis is a global health care company that was created in 1996 following the merger of Swiss drugmakers Ciba-Geigy and Sandoz. The company sells patented prescription medicines for the treatment of cancers and rare diseases, and in various therapeutic areas such as ophthalmology, neuroscience, respiratory and cardiometabolic. Sandoz focuses on generics and biosimilars.
NVS has shed some segments and divisions the last seven years to focus on its core pharmaceutical business. In 2021, NVS sold its investment in Roche Holding AG (RHHBY) in a single bilateral transaction for $20.7 billion and announced that it is commencing a strategic review of Sandoz, and expects to provide an update on their plans at the latest by the end of 2022. Meanwhile, dividends have been paid uninterrupted since 1992.
Philip Morris International is the world's largest publicly traded manufacturer and marketer of tobacco. It's most recognized brand is Marlboro, but the company also has offerings in the mid-price and value categories.
Using its existing brands, PM plans to introduce new packaging, new blends and other line extensions across its portfolio and in existing and new markets.
The company plans to spend about half of its R&D budget to develop next generation products that meet consumer preferences and cause less harm than traditional tobacco produce.
PM has raised its dividend every year since its spinoff from Altria Group (MO) in 2008. The company recently started repurchasing stock, buying backing back 2 million shares for $199 million in Q1 2022.
