Jake Lynch will be hosting a live chat in the Stockpickr Forums today, March 18, starting at 1 p.m. ET. Join the conversation!BOSTON ( TheStreet) -- Stock-market strategist Jeremy Grantham at Boston-based investment firm GMO says "the outperformance of high-quality U.S. blue chips compared with the rest of U.S. stocks is nearly certain" in the long term. Grantham achieved a following by avoiding bubbles, including technology stocks in the 1990s and credit markets in 2006. When he's bullish on an asset class, it's wise to emulate him. Investors seeking to implement Grantham's strategy could purchase an exchange traded fund that tracks the mega-cap Dow Jones Industrial Average such as the Dow SPDR ( DIA).
|Stockpickr: Who Owns Pfizer?|
Pfizer holds $26 billion of cash, equating to a quick ratio of 1.1, and $49 billion of debt, translating to a debt-to-equity ratio of 0.5. TheStreet's stock model awards it a financial-strength score of 9.4 out of 10 for its durable balance sheet and consistent operating results. Profitability gauges, return on equity and return on assets, trail industry averages. Underperformance is partly attributable to size. Pfizer has a market value of $139 billion.The stock has trailed major benchmarks during the past year, but offers an attractive 4.2% dividend yield, evident in the chart below.
Pfizer is undervalued based on all of our relative-valuation measures. Its stock is cheaper than those of pharmaceutical peers based on trailing earnings, projected earnings, book value, sales and cash flow. Its PEG ratio, a measure of value relative to expected long-term growth, of 0.2 reflects a 74% discount to the industry average. A PEG ratio below 1 signifies cheap shares. Here is a snapshot of how Pfizer's stock price stacks up.