If you're aiming to "buy low and sell high," then it makes infinite sense to start your search with bargain-priced stocks. Regularly reviewing a list of stocks trading near their 52-week lows can be a great first step.

Here, I'll try to do the initial legwork for you. To prevent us from being inundated with scores of disparate companies, I'll conduct my search by industry. This will allow us to make some initial comparisons among semi-related companies.

There are 24 industry groups as defined by the Global Industry Classification Standard (GICS). The pharmaceuticals industry is one of them.

Below are the top seven companies in this space (by market cap) that are hugging 52-week lows.


Market Capitalization
(in Millions)

Change From 52-Week Low

P/E Ratio (Trailing)

Johnson & Johnson (NYSE: JNJ)




Novartis (NYSE: NVS)




GlaxoSmithKline (NYSE: GSK)




sanofi-aventis (NYSE: SNY)




Amgen (Nasdaq: AMGN)




Teva Pharmaceutical (Nasdaq: TEVA)




Eli Lilly (NYSE: LLY)




Source: Capital IQ, a division of Standard & Poor's. Data as of Oct. 18, 2010.

There are certainly some big names trading near their lows. As I warn frequently in this series, though, be careful, because many of these stocks are also trading in a tight band -- hence they're close to their highs as well.

So let's focus on valuation instead. On a P/E ratio basis, each is trading at cheap to moderate levels. And I see that each of their price-to-free cash flow ratios is roughly in line with their P/E ratios. That's a good sign.

I've written about Johnson & Johnson recently as an interesting play. Ideally, I'd like a buy-in price below $60 a share. It trades a little above that now.

As you research any of these stocks further, remember that the fear for Big Pharma is about the fading prospects for their drug pipelines. Any investment thesis should consider how effective they'll be at replenishing their blockbuster drugs once they're off patent.   

Interested in reading more about these stocks? Add them to My Watchlist to find all of our Foolish analysis on them.

Anand Chokkavelu doesn't own shares of any companies mentioned. He posts his favorite articles on his Twitter feed.

GlaxoSmithKline and Novartis are Motley Fool Global Gains recommendations. Motley Fool Options has recommended a diagonal call position on Johnson & Johnson, which is a Motley Fool Income Investor selection. The Fool owns shares of GlaxoSmithKline, Johnson & Johnson, and Teva Pharmaceutical Industries.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Motley Fool has a disclosure policy.