Top Stock Picks '09: Pfizer (PFE)

Posted Jan 2nd 2009 5:00PM by Steven Halpern
Filed under: Pfizer (PFE), Newsletters, Stocks to Buy, Best Stocks for 2009

This post is part of a special annual report -- Top Stock Picks '09 -- in which TheStockAdvisors.com asked 75 leading newsletter advisors to select their favorite investment for the new year.

"We're not bullish on stocks until we see an improving economy; but if I had to choose a top pick for 2009, I have no problems choosing Pfizer (NYSE: PFE)," says Alan Newman in CrossCurrents.

"Given a lousy environment for stocks in the last half of 2008 and what appears to be the same going forward for the year ahead, the only logical course is to choose a company that pays a generous dividend.

"That will reward us for whatever patience will be required for our investment holding period. Thus, Pfizer, with its hefty 7.5% yield, makes good sense.

"In a bear market such as now, there are always minuses to consider. Pfizer has recently announced that, for the first time in 40 years, they are not raising their dividend.

"As well, Lipitor is the company's most successful product and it will lose patent protection just a couple of years down the road. Furthermore, there does not seem to be any blockbusters in the pipeline to replace Lipitor's $13 billion in sales.

"On the positive side, Pfizer has a huge cash hoard of over $26 billion -- $3.86 per share -- and this cash is likely to give Pfizer a competitive advantage if a suitable target arises with an attractive pipeline of new drugs.

"In any event, the company is well poised to weather an economic recession. At a forward price earnings multiple (P/E ratio) of under 7, Pfizer shares are an excellent value at current levels."

Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.

Tags: alan newman, crosscurrents, dividend stocks, drug development, drug stocks, income stocks, pfe, pfizer, pharma stocks, pharmaceuticals, steven halpern, thestockadvisors.com, yield stocks