The Associated Press
Validea's pick of the week provides a detailed report on a company that scores well in the stock-screening service's model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor has a distribution agreement with Validea.ca. Try it.
Global health care firm Merck & Co. makes prescription medicines, vaccines, biologic therapies and animal health products, and has customers or operations in more than 140 countries. It has a market cap of $166-billion (U.S.).
Merck gets strong interest from the Peter Lynch model, which likes its reasonable 14.3 P/E and 0.37 P/E-to-Growth ratio.
The company has a 3.1-per-cent dividend. It has debt/equity ratio of 56 per cent, well below the 133-per-cent biotech & drugs industry average, which the Martin Zweig-based model likes.
The James O'Shaughnessy-based value model likes its size ($42-billion in TTM sales). The O'Shaughnessy approach also likes its solid dividend and good cash flow ($3.43 per share vs. market mean of $1.80).
Merck has a profit margin of 9 per cent. It has averaged a return on retained earnings (those not paid out as dividends) of 21.8- per cent over the past decade, impressing the Warren Buffett model.
John Reese is long MRK.
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