Novo Nordisk: A Perennial Favorite
08/22/2017 2:56 am EST
Despite the risks, investors should not be scared off from investments in quality foreign companies, explains dividend reinvestment expert Chuck Carlson, editor of DRIP Investor.
One stock that has been a perennial favorite is Novo Nordisk (NVO). Based in Denmark, Novo Nordisk is a world leader in diabetes treatment.
Diabetes is growing at an alarming rate globally. Novo Nordisk is positioned to benefit from the increasing need for treatments.
After years of upward performance, these shares took a big hit last year. The company fell victim to some of the pressures that have hurt other pharmaceutical stocks — increased competition and the erosion of pricing power.
Despite these headwinds, I think the stock is priced right for new buying. Though the shares have rebounded a bit this year, the stock still trades at a 26% discount to its 52-week high of more than $57.
Rarely has Novo Nordisk presented such a great buying opportunity. Granted, patience is required, and my guess is there will probably be another move below $40 in the near term. But 24 months from now I see these shares trading at significantly higher prices.
And the dividend yield of 2% provides some payoff while waiting for the stock to rebound. I own the shares and view them as a solid play among ADRs with DRIPs.
Novo Nordisk’s direct-purchase plan is available to all U.S. residents. Minimum initial investment is $250. Subsequent investments are a minimum $25.