Buying quality shares if they are not popular can be very worthwhile.
A good place to look for unpopular shares nowadays is in the health care sector, such as the nomination and confirmation of Robert F. Kennedy Jr. As the American Minister of Health and Human Services, the investor sentiment in health care has cooled shares. Kennedy is a vocal critic of the pharmaceutical industry and many leading pharmaceutical shares act well with their highlights.
I think leading pharmaceutical companies Pfizer (NYSE: PFE) And Novo Nordisk (NYSE: NVO) Could be the best performing value shares in the next five years.
Only the time will learn if I am right, but there is a compelling pitch for every stock.
Pfizer was a big winner during the COVID-19 Pandemie. It developed a vaccine (comirnaty) and treatment (Paxlovid) for COVID-19 that amounted to more than $ 56 billion in turnover in 2022, more than half of the total turnover of the company. This meant a peak for Pfizer, where the upper and bottom lines collapsed as the temporary sale dried up. However, the tide started to run. Pfizer’s turnover and income began to grow again in 2024.
In recent years, the company has spent the positioning of growth in oncology, including a blockbuster $ 43 billion acquisition of Seegen to strengthen its oncological pipeline. Pfizer anticipates a strong growth in oncology in the next five years. Management expects to double its patient base by 2030 and anticipates at least three new blockbusters (medicines with more than $ 1 billion in annual turnover). The turnover of oncology increased by 25% in 2024, so the growth is already absorbing steam.
Analysts estimate that Pfizer will grow by almost 14% annually in the next three to five years. Until now, investors have not noticed it. The share is almost the lowest price in more than ten years, and the dividend yield (6.7% from this letter) has not been that high since the financial crisis in 2007-2009. Pfizer’s income easily cover the dividend, so this seems more like headline fears with keeping the stock low than financial risks.
With the current price-win ratio, the PEG ratio of Pfizer is only 0.6. Everything younger than 1 is considered cheap and I often buy quality shares with PEG ratios from 2 to 2.5. Pfizer is amazingly cheap and offers a double digits of growth potential plus a huge dividend yield. Assuming that Pfizer delivers as hoped, the stock could double or better in the coming five years.
The roots of Novo Nordisk go back decades because his expertise in insulin and diabetes led to become one of the world’s largest pharmaceutical companies. GLP-1 agonists have conquered society in recent years. The weight loss drugs treat diabetes and obesity by suppressing appetite and delaying digestion. Novo Nordisk’s Ozempic – approved to treat diabetes – is perhaps the most popular; The name has become synonymous with GLP-1 agonists.
