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.
"My selection for 2009 is Bristol-Myers Squibb (NYSE: BMY)," says Chuck Carlson, the leading advisor in the area of dividend reinvestment plans.
In his The DRIP Investor, he explains, "This pharmaceutical company has a lot to offer investors, including a high yield, a rising profit stream, and a speculative kicker in the way of takeover appeal." Here's his review.
"Bristol-Myers Squibb has a number of popular brands, including Plavix, the company's leading cardiovascular product; HIV treatments Reyataz and Sustiva; and oncology product Erbitux. Its stable of products has helped drive decent sales growth.
"Bristol-Myers Squibb has done a nice job of ?rming up its balance sheet. The company's cash coffers were boosted by the sale of its ConvaTec medical-device and wound-care business for $4.1 billion.
"At the end of the third quarter, the ?rm had more than $7 billion in cash and securities, a 'signi?cant majority' of which was invested in Treasury Bills and Treasury-backed securities.
"The strong finances should allow the company to continue to fund research and development. The firm recently announced that it believes it can improve cash flow up to $1 billion cumulatively by 2011 through better inventory, receivables, and payables controls.
"Bristol-Myers Squibb boosted its dividend nearly 11% at the beginning of this year. Even if the company doesn't raise its dividend in 2009, the current dividend of $1.24 per share provides a yield of more than 6%.
"The firm has undergone a significant restructuring in recent years, shedding businesses while boosting its biopharma presence. The shares trade at just 11 times the 2009 consensus earnings estimate, an attractive valuation.
"To be sure, the company has a history of shooting itself in the foot, which is probably one reason Wall Street has not embraced these shares in recent years. Still, with the earnings picture brightening, 2009 should be a much better year for the stock.
"Investors should note that Bristol-Myers Squibb offers a direct-purchase plan whereby any investor may buy the first share and every share of stock directly from the company."
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.
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