Dykstra: Finding Good Medicine in Pfizer Calls

Before I get to your questions, I would like to continue hammering home an effective investment strategy that I have been pushing all week: Great deep in-the-money (DITM) plays don't always involve finding and buying new stocks.

Instead, it's always worthwhile to keep track of companies that you have traded successfully before and that you still like at appropriate buy levels after a drop in price. Just because a stock has fallen, it doesn't mean there's not a reason to buy it -- in fact, look at these opportunities as chances to make money.

Recently I have done that with Amgen (AMGN Quote), Bank of America (BAC Quote) and Yahoo! (YHOO Quote).

Today I will do so with Pfizer (PFE Quote).

With this week's mini-correction, Pfizer has once again become ripe for a DITM play. All of the characteristics of this company that made it an attractive buy when I first wrote about it in my column on April 17 are still there. It is an incredibly profitable company that invests extraordinary amounts of money in R&D in order to remain at the cutting edge of the pharmaceutical industry.

Pharmaceuticals is a sector that's heavy on R&D. With exclusive monopolies constantly disappearing via patent expirations, it's important for companies to keep a steady flow of new drugs coming to market and expanding the uses of existing drugs. Pfizer does so in such a way that has brought great benefits to society and to its shareholders.