ALEXANDRIA, VA (Nov. 27, 1998) -- A short week and a holiday Friday couldn't stop Nasdaq from surging higher. After ending the week with a 31 point advance, the Nasdaq Composite is only 13 points below its all-time high, while this week the Dow already burst to a new record.
Our Flower child, the groovy Drip Port, faltered as its beloved J&J and Intel holdings wilted. There was little news other than two analysts downgrading J&J based on discussions with management. DLJ Securities lowered 1999 EPS estimates to $2.96 per share from $3.00, and rated the stock a Buy, down from Top Pick. We certainly won't cower at the chance to buy J&J at lower prices, in fact we welcome it. Both stocks had been growing this month as if over-fertilized anyway.
Despite the downgrade, the DLJ analysts predict fourth quarter revenue increasing "in the high single digits," with the DePuy acquisition helping. Sales grew only 2% last quarter.
Without other news, let's simply try to learn incremental information about our largest holdings. We'll call this concept "Hey, didja know...?" Hey, didja know that Intel sells microprocessors? Hey, didja know that J&J is a healthcare company?
Those are probably fairly well-known bits of information. But did you know that pharmaceutical sales at Johnson & Johnson (NYSE: JNJ) have grown from $4.4 billion in 1993 to over $8 billion this year? That's great progress in just five years. By the year 2000, J&J's pharmaceutical sales are expected to top $10.4 billion. The company has drug market share in the U.S. that puts it among the top-three of all drug makers. By sheer size, the company's drug unit is the fifth largest in the world. Its two largest drugs are Procrit/Eprex and Propulsid, both with sales in excess of $1 billion in 1997. The first drug is a red blood cell stimulant. The second is for heartburn.
J&J's third largest-selling drug last year was Risperdal, for schizophrenia, at $882 million. Number four was oral contraceptives, at $708 million. In the first half of this year, sales of the first three drugs just mentioned grew 44%, 29% and 19%, respectively. Procrit is growing quickly because the drug was recently approved in the U.S. for patients undergoing chemotherapy.
When I next write a "Hey, didja know?" column, we'll discuss the many drugs in J&J's pipeline and the expected revenue that they'll generate in 1999 and 2000.
Touchstone Friday. The week was short but sweet. On Monday, we talked salt and chocolate: soup and Pepperidge Farm cookies. Campbell Soup (NYSE: CPB) announced first quarter '99 results that included strong volume growth and excellent improvements in margins. Get spoon-fed the news by clicking Monday's column above, or simply click it below if you're reading this column on the Web. (Witness how technology is making us obsolete on Fridays!)
On Tuesday, Brian shared the trailing twelve-month, five-year and fifteen-year returns (with dividends reinvested) for all of our oil investment possibilities. Even after a brutal 1998, many of the companies are handily beating the market over the past fifteen years. It's interesting to see which companies are doing so, and it's a great column to think through -- (why are these companies outperforming?) -- so give it a thought!
On Wednesday, we discussed the Fool's second annual Share Our Strength (SOS) charity drive. It's an important event that raises money to feed, shelter and then educate and eventually employ individuals. If you care to altruistically give to others this season, please consider SOS.
Next week: batter up! Drip Port will have familiar Fools stepping to the plate next week. Vince Hanks (TMF Elwood) will write the Drip column on Monday and Tuesday, just in time for the holidays. Vince has thoughtful tidings and giving advice to share. Next, "Car-less Brian" (TMF Panic) will return on Wednesday and Thursday to discuss oil industry consolidation and OPEC's future.
The week following next, Brian plans to move into explaining upstream operations in the oil industry (remember our definition of "upstream?") and Vince and TMF Runkle will join us again. It's been a long time since we saw Runkle here!
The week following that, I'll begin to discuss downstream companies. The oil industry is so diverse that we want to explain it by division and then move to the actual companies. Brian also plans to compare natural gas to oil, as an investment, by the end of December. (Of course, if today's news regarding a possible Mobil (NYSE: MOB) and Exxon (NYSE: XON) merger actually happens, our plans might alter somewhat!)
Investments. We sent $100 last week to buy Mellon Bank (NYSE: MEL) and the day following that we received our first Mellon DRP statement.
For questions and comments ranging from how to begin DRPs to how to waterski barefoot (we're olympic experts), please drop by the Drip message boards. (Plus, for every post you make the Fool gives money to charity, as explained on Wednesday). Have a Foolish weekend! Keep DRPing...
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