The pandemic has been tough on the global economy. However, it has also created greater awareness about healthcare and pharmaceuticals. Discussions about various drugs and vaccinations have brought increasing amounts of focus on giants like Pfizer and Merck. If you are looking to invest in the health sector, then there are plenty of pharmaceutical stocks to buy in 2021. You could go for a smaller high-growth company or focus your attention on established dominant players like Merck. The company is centuries old and has been making dividend payments for the last 34 years. Such qualities signal a stable business model with significant cash flow generation. Plus, the valuation of Merck could be another reason to take a closer look at the stock. Warren Buffet is believed to have a position in Merck. So, the stock seems to have made it through the world-famous investor’s filter as well.
A Closer Look At The Financials Of Merck
Merck does not seem to have had any revenue growth over a 10-year period. Its revenue was $48 billion in 2011, and it is close to that number in 2020 as well. Revenue had dipped to levels below $40 billion in 2015 and 2016 but seemed to have recovered in recent years. Net income shows an upward trend, rising from $6.2 billion in 2011 to $9.8 billion in 2019 before falling to $7 billion in 2020. Dividends per share have grown from $1.56 per share in 2011 to $2.48 per share in 2020. In fact, dividends have grown every year throughout the past decade. On the valuation front, the P/E ratio is currently around 28, below the 5-year average of over 40. Merck could be among the best pharmaceutical stocks today.
Merck’s stock has been on an upward trend during the last ten years. In fact, since hitting a low in 2009, the stock has more than tripled, representing a growth of over 200%. The price has seen pullbacks in 2015, 2017, and 2020. During the March 2020 market crash, the stock fell from its January 2020 peak by more than 20%.