Which stocks are looking fine in ’09? Discover all our Foolish ideas for The Best Stocks for 2009.

It pains me to use the words Pfizer (NYSE:PFE) and "best" in the same title. The company has languished for so long -- and for good reason.

But it's time to sing a different tune about Pfizer. The Lipitor patent cliff is still staring the company in the face, but the languishing stock price has made the company so much more attractive; it could see a breakout in 2009.

An OK pipeline
When a company is raking in nearly $49 billion in yearly revenue, it takes a lot of drugs to move the top line. Fortunately, Pfizer has a decent pipeline, with 15 drugs being tested in 24 different indications in phase 3 trials.

Factoring in failures, those drugs probably aren't going to be enough to replace sales of Lipitor and the other drugs that are going off patent in the coming years, but they don't really have to. Pfizer is trading at such a discount to its usual multiples -- price to earnings, price to free cash flow, pretty much anything else you can think of -- that the company can afford to take the hit to revenue and not look overly expensive.

And with recent cutbacks in its workforce, the hit to the bottom line shouldn't be nearly as extreme as the blow to revenue when Pfizer loses Lipitor. Companies can't cut their way to earnings growth forever, but a leaner, meaner Pfizer should be able to handle the loss a lot easier than the bulky one that could hide the fat with a blockbuster drug growing year after year.

A mountain of cash
Pfizer's sitting on a pile of cash that's 26 billion dollars high. That's considerably more than its competitors:


Cash and Short-Term Investments (billions)



Johnson & Johnson (NYSE:JNJ)


Wyeth (NYSE:WYE)


GlaxoSmithKline (NYSE:GSK)




Source: Capital IQ, a division of Standard & Poor's. As of the quarter ending September 2008.

I've certainly been part of the do-something-already bandwagon that's been parading around Pfizer for many years, but clearly waiting has worked. Many drug companies are available at dirt-cheap prices and, as Johnson & Johnson has already shown, shrewd use of cash can result in picking up companies for deep discounts.

Hopefully, any acquisitions Pfizer makes in the coming years will help to supplement its pipeline or even contribute revenues immediately.

Getting paid to wait
Even if there isn't a catalyst in 2009 to really make the stock take off, investors need not stay away. With the dividend intact for another year, Pfizer's paying its investors quite well to just stay put.


Dividend Yield



Merck (NYSE:MRK)


Bristol-Myers Squibb (NYSE:BMY)


Eli Lilly (NYSE:LLY)


Source: Motley Fool CAPS.

While I guess it's possible that Pfizer could drop more, it seems likely that it'll trade sideways during the year. The 7%-plus payout should be enough to reward investors for waiting.

What more could a Fool ask for?
For 2009 to look nothing like 2008, for one thing.

Fools need to remember that investing is a long-term endeavor. Pfizer's overall picture isn't likely to change that much in 2009, but that doesn't mean that now isn't a good time to invest. Investors are a fickle bunch, and determining when Pfizer might take off is difficult.

Will a decent pipeline, a mountain of cash, and a fat dividend be enough to give investors a nice return in 2009? Cast your vote by marking Pfizer an outperform or underperform at Motley Fool CAPS, and join more than 120,000 other Fools interested in making next year a profitable one.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.