Stack: Fond of Pfizer

01/02/2004 12:00 am EST

Focus:

James Stack

President, Stack Financial Management

Jim Stack 's safety-first approach exemplifies the best of conservative money management. His 2003 pick of Encana gained 23%, keeping pace with Dow, while offering safety and stability for a diversified portfolio. This year, he sees value and growth from Pfizer.
 
"The large pharmaceutical stocks have been the Rodney Dangerfield 'can't get any respect' sector in 2003.  Our top stock pick for 2004 is Pfizer (PFE NYSE) based on its low historical valuation, growth catalysts unique to Pfizer, and our safety-first investment philosophy and cautious view of market environment for the fourth-quarter 2004. This traditionally defensive security is currently trading at only 16 times consensus 2004 earnings estimate versus 18x for the S&P 500. This discount becomes more meaningful when one considers that Pfizer has historically traded at a distinct premium to the market and currently has significantly less debt and substantially higher profit margins and returns on capital than the market averages."

"While the concerns regarding the pharmaceutical industry's dearth of new drugs and rising patent expirations are legitimate, we believe Pfizer's product pipeline and patent expiration profile is one of the best in the industry.  This position reflects an industry-leading research program, new products from the Pharmacia acquisition and the unique alliances the firm has forged with other laboratories to co-develop new drugs. In addition, a meaningful amount of the strong cash flow (over $20 billion in 2004) Pfizer is expected to generate will be deployed in repurchasing shares and adding to the dividend which has grown 19% annually for the past five years."
 
James Stack will be participating in Finding All-Star Funds to Diversify Your Portfolio at The World Money Show in Orlando, Florida, February 4, 2004. Tickets are $59.00 through January 22, $69.00 afterwards. Click here for more information or to purchase tickets.
 

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