A quick note on my suggestion Tuesday to close out Pfizer (PFE) - Get Report before the stock went ex-dividend. As I stated yesterday, the looming dividend, combined with a stock market that has been nothing short of "en fuego," indicated that it was wise to make the adjustment and close out the trade $1,200 to the good.
Today's pick is
, the London-based pharmaceutical giant. With strong growth in the health care arena, I believe now is the time to take a look at this company. It took a big hit after announcing it was buying
, a Maryland-based biotech company, for $15 billion.
Although this acquisition may take a while to boost AstraZeneca's earnings, it adds a great new and growing segment to the company's arsenal of profitable products. One of those products is Crestor, a member of the statin class that reduces bad cholesterol, or LDL, while raising HDL, or good cholesterol.
Also, MedImmune collects royalties on sales of vaccines for human papillomavirus (HPV). This bodes well for AstraZeneca's future, as this vaccine is newly offered and quickly gaining traction.
AstraZeneca boasts a free cash flow of $6.19 billion, giving it significant leverage and the ability to seek out valuable acquisitions. Although the company has been relatively slow in bringing new pharmaceutical products to market, it can use this cash flow to acquire new pharmaceutical and biotechnological products.
In addition, the company is in the midst of a $4 billion share-buyback program for 2007. I always look for share-buyback programs because they provide a great boost to shareholder value and a ready buyer of shares should the market dry up.
The company also pays shareholders a generous $1.72-per-share dividend. With a 41% return on equity, management is taking advantage of the company's equity and cash to reward its shareholders.
In late April, AstraZeneca reaffirmed its 2007 guidance. The stock is down considerably from its 52-week high of $66.49, so now is the time to use deep-in-the-money calls to our advantage. I will place a limit order to buy 10 contracts of the October $45 (AZNJI) DITM calls at $9.20 or better.
Always remember: Life is a journey; enjoy the ride!
Here's this week's Stat Book.
**For information on the Comcast 3 for 2 split - please view the International Securities Exchange circular at:http://www.iseoptions.com/marketplace/files/adjustments/2007/2007-031$Comcast_Corporation_-_Class_A_(CMCSA)_3_for_2_Stock_Split$20070216.pdf
At the time of publication, Dykstra was long AZN.
Nicknamed "Nails" for his tough style of play during his Major League Baseball career, Lenny Dykstra was an integral member of the powerful Mets of the mid-1980s, including the world champion 1986 squad, and the Phillies in the early 1990s.
Today, Dykstra manages his own stock portfolio and serves as president of several of his privately held companies, including car washes; a partnership with Castrol in "Team Dykstra" Quick Lube Centers; a state-of-the-art ConocoPhillips fueling facility; a real estate development company; and a new venture to develop several "I Sold It on eBay" stores throughout high-demographic areas of Southern California.