Well that didn’t take long. Just a few days into the month of August, I already made my first purchases. With the start of the new month we have seen a couple notable stocks plummeting in a single day highlighting the knee jerk reactions investors make when earnings or guidance does not paint a growing and rosy picture. First we have seen Cardinal Health, Inc. (CAH) take it on the chin after announcing downbeat guidance for 2018 and fellow peer AmerisourceBergen Corporation (ABC), while showing an earnings beat, dropped approximately 13% on a sales miss. The market can be merciless at times but we already know that. With that being said let’s take a look at my recent stock buys in August.
I have added to my taxable account 14.0 shares at $33.44 for a total investment of $468.16 in Pfizer Inc. (PFE). This was a commission free trade. With this recent purchase my taxable account holdings in PFE now totals 25.0 shares with a market value of $835.75.
I have added to my taxable account 82.0 shares at $24.59 for a total investment of $2,016.38 in Teva Pharmaceutical Industries Limited (TEVA). With this recent purchase my taxable account holdings in TEVA now totals 98.0 shares with a market value of $2,327.50.
After a monster drop because of weaker generic drug prices coupled with slowing demand in the U.S. for their top generics, increased competition from other biosilimars on the market and an announced dividend cut of 75% created the perfect storm and dragged stock prices down to the cellar. Of course a recent buying spree for the company increasing its overall debt load did not help either. As you can see this company is facing some very serious near and mid term headwinds. That being said, TEVA is still the largest generic pharma company in the world and while I may not make TEVA a long term dividend hold for decades on end, there is definitely blood in the streets with this stock and despite the dividend cut I went ahead and increased my holdings. We’ll see where TEVA is trading in six months or a year from now. If prices rebound significantly this may be my first “swing trade” in my portfolio. For now, I think I’m content with my allocation in TEVA, barring another 25% drop, and will simply hold, collect the dividend and wait for a meaningful price rebound. Time will tell.
What do you think about my recent stock purchases? I realize that TEVA is a risky buy, trading at prices not seen in about fourteen years coupled with a very high debt load, it will need to start taking advantage of its vast generics offering and quickly make good on the fairly recent Actavis Generics acquisition. As I said above, time will tell. Please let me know your thoughts below.
Disclosure: Long CAH, PFE, TEVA