By
Brian Lawler
|
More Articles
September 6, 2007
|
The pro football season kicks off tonight, and the Fool is getting in the spirit. Our fantasy team might just help you tear up the investing gridiron! Head this way to read all about the starting lineup.
In fantasy football, offense usually propels players to the top. But in real life, defense wins championships, as the saying goes. A good high-yielding Income Investor type of stock like GlaxoSmithKline (NYSE: GSK ) can shield investors from a punishing sack by the market.
Many investors shy away from the pharmaceutical sector because of its perceived risks. GSK's 3.9% annualized dividend yield and moderately growing bottom line make it more of a prevent-dime formation rather than a risky blitzing defense.
A public company's market capitalization and growth potential are often inversely related. Large-cap stalwarts like Home Depot (NYSE: HD ) or General Motors (NYSE: GM ) struggle to produce the sufficient magnitude of extra revenue they need to notch higher year-over-year top-line gains.
Size does have its advantages when it comes to pharmaceutical companies like GSK, though. Lately, GSK's diabetes compound Avandia has been garnering negative media headlines because of possible adverse events. But its large size makes GSK diversified enough that losing all of its Avandia sales (highly unlikely) in the future would only represent 6% of its most recent quarter's revenue.
The worst for GSK's share price may be over, following July's FDA advisory committee review of the Avandia safety profile. The advisory panel meeting wasn't as much fun to watch as the Super Bowl, but GSK received a slightly positive vote of confidence on the drug's safety.
Investors should still pay close attention to GSK's stock price in the near term, since negative media attention regarding Avandia may spur an even better discount on shares of this All-Pro defensive pharma.
RSS Headlines
Fool UK