These aren't particularly good times for pharmaceutical companies. The shares of most major players are in an extended slump, and blockbuster drugs are dropping off-patent faster than Tiger Woods' endorsements, presenting us with an industry in turmoil. That makes it a good time to be watching pharmaceuticals, as some companies adapt to the changing environment and others teeter on the brink of collapse. And today, we're able to single out the one player in this attention-grabbing industry that is the most watched.
People watch stocks for different reasons: They're waiting for a dip in price, watching for a specific catalyst, gathering all the news and information that might affect stocks they already own, or considering a sell. Regardless of their motivation, we can better understand market sentiment by seeing who's watching what. With the Fool's free My Watchlist service now three months old, we have tens of thousands of people telling us which businesses have, for whatever reason, piqued their interest.
And the most-watched pharmaceutical company is...
Looking at the aggregate data, we see that Johnson & Johnson (NYSE: JNJ ) is the dramatic leader in terms of watch interest, the percentage of people keeping an eye on the pharmaceutical industry in general who are specifically watching each company.
That's no surprise. As the head of our analyst development program told me in late November, when he identified three unbelievable bargains to buy, J&J is simply too appealing not to buy. It's a strong and growing business boasting very low multiples, an unparalleled balance sheet, a trend of buying back shares, and a dividend (like many in this industry) that outpaces inflation. Shares haven't done much (like the majority of the industry's companies), but he and users of My Watchlist think there's still plenty of reason for optimism.
Here are the rest of the pharmaceutical companies, their watch interest, and each stock's CAPS ratings, which show the sentiment of our free investing community:
|Johnson & Johnson||$170,405||*****||27.3%|
|Pfizer (NYSE: PFE )||$140,895||****||13.8%|
|Abbott Laboratories (NYSE: ABT )||$73,256||*****||8.4%|
|Merck (NYSE: MRK )||$111,528||****||7.5%|
|Teva Pharmaceutical (Nasdaq: TEVA )||$46,561||*****||6.9%|
|Bristol-Myers Squibb (NYSE: BMY )||$45,514||****||6.1%|
|Eli Lilly (NYSE: LLY )||$40,418||****||4.6%|
Source: Motley Fool CAPS.
Nobody's expecting an overnight turnaround for the industry, but handsome dividends keep investors watching, and even buying. As the Fool's Brian Orelli wrote in an article about pharmas paying attractive dividends, "At some point, the research-and-development tides will turn, drugmakers will have fallen completely off their patent cliffs, and investors will be able to watch top- and bottom-line growth turn into substantial increases in share prices. For now, though, investors will have to be content collecting their dividends while they wait."
Whether you're keeping an eye on the industry for price pullbacks, considering jumping in for the dividends, or just reminding yourself that things will eventually turn around for pharmaceutical companies, it pays to watch. You can make smarter investing decisions with your own version of My Watchlist, free from the Fool. Click below to start following one of the stocks mentioned above: