Pfizer’s (NYSE: PFE) COVID-19 vaccine candidate, which it developed with BioNTech, has shown 95% efficacy, so it may come as a surprise that as of this writing, Pfizer’s stock is up less than 2%, year over year, while the S&P 500 is up nearly 16%. That’s an opportunity.
Although the vaccine would likely generate billions of dollars in revenue, Pfizer is a company that reported $51.8 billion in revenue last year and $16.3 billion in profit. Clearly, it has a lot of other things going on.
Its growth drivers include Vyndaqel, which is approved for treating the rare genetic disease transthyretin amyloid cardiomyopathy, and blood thinner Eliquis. Pfizer is awaiting regulatory approval decisions for several treatments, such as abrocitinib for atopic dermatitis and tanezumab for osteoarthritic pain. Pfizer’s pipeline includes 21 treatments in late-stage clinical trials.
Meanwhile, Pfizer has spun off its Upjohn business to form a new company with Mylan, called Viatris. Pfizer will receive a $12 billion cash windfall from the deal, which could go to growth-fueling acquisitions.
Pfizer pays its shareholders a dividend that recently yielded 4.1%, and it has been boosting dividend payments by an annual average of 5.4% over the past five years.
The company is poised to deliver solid growth over the years to come, along with dependable income, so long-term investors should give it a closer look.
Ask the Fool
Q: I see that Janet Yellen is expected to become the next secretary of the Treasury. What does that job entail? – R.Y., online
A: If Yellen is confirmed by the Senate, she’ll be the first woman in the job since it was created in 1789. (Alexander Hamilton was the first secretary.)
Yellen will oversee the Department of the Treasury, which encompasses many bureaus and is charged with many tasks. These include collecting taxes; paying government bills; overseeing currency and coins; managing government accounts and the public debt; supervising national banks and thrifts; and advising on domestic and international financial, monetary, economic, trade and tax policy. Its bureaus include the Internal Revenue Service (IRS), the Bureau of Engraving and Printing (bills) and the U.S. Mint (coins), and the Financial Crimes Enforcement Network.
Q: Are cannabis-focused exchange-traded funds (ETFs) good investments? – B.V., Kailua, Hawaii
A: You should do your own research into the growing medical and recreational marijuana industries to see whether you think their futures look rosy or bleak.
If you end up bullish on cannabis-focused companies, then ETFs are a good option. Like mutual funds, each will distribute your investment across a bunch of companies in or related to the industry, such as marijuana cultivators, owners of dispensary real estate, retailers, growing equipment providers and more.
There are many such ETFs to choose from, though most are fairly new and small; see which ones best match your interests and charge the lowest fees. Here are a few (with some amusing ticker symbols): MG Alternative Harvest ETF (MJ), Cambria Cannabis ETF (TOKE), Global X Cannabis ETF (POTX) and AdvisorShares Pure Cannabis ETF (YOLO).
Don’t put all your eggs in the cannabis basket, though – or any other single basket.
My dumbest investment
My dumbest investment happened when I left a job at Apple in December 1997. At the time, I had options to buy 12,000 shares. I didn’t buy a single share. Instead, I sold the options and bought a case of beer with the results. I should have stayed at Apple. – R., online
The Fool responds: Ouch! Apple’s stock has split four times since 1997, which would have turned 12,000 shares into 24,000 shares, then 48,000, then 336,000, and then 1,344,000 shares. (Note that the value of shares at the time of a split is reduced proportionately, so the splits themselves don’t make a stock’s value skyrocket.)
If you had bought 12,000 shares (for around $1,440) and hung on to them, you’d have 1.344 million shares, and with the stock recently trading around $126 per share, that would be worth more than $169 million! Of course, a glorious future wasn’t clearly in the cards for Apple in 1997: The iMac debuted in 1998, and the iPod in 2001; the iPhone was launched in 2007.
Even if you’d bought all 12,000 shares, at some point they’d have come to dominate your portfolio, and it would have been sensible to sell some, lest you keep too many eggs in that one basket. Apple’s rise wasn’t uninterrupted, either: Shares plunged by more than 50% in 2008, and by almost 40% in 2018.