Categories: Alpha Algorithm HotlinesStock Market News

Making a Bet on Big Pharma

This week’s Alpha Algorithm hones in on yet another steady-dividend-paying stock, typical of the stocks that have been outperforming the broader stock market in this range-bound year. The stock’s pullback over the past few days offers a particularly good entry point.

Incorporated in 2012 and based in North Chicago, Illinois, AbbVie Inc. (ABBV) is one of the nation’s largest pharmaceutical companies. The company’s three most important drugs on the market today are Humira (rheumatoid arthritis), Imbruvica (cancer) and Viekira Pak (Hepatitis C).

AbbVie started its corporate life as a spin-off of Abbott Laboratories (ABT), whose dividend history is included in AbbVie’s for the purposes of the Alpha Algorithm strategies.

AbbVie Inc. (ABBV) vs. the S&P 500 YTD

Six Top Investment Strategies Betting on AbbVie Inc. (ABBV)

Dividend Aristocrat

The stock is among those in the S&P 500 that have increased dividends for at least 25 consecutive years.

Dividend Dogs

One of the five highest-yielding stocks among each of the 10 sectors tracked in the S&P 500.

High and Steady Dividend

The stock is one of 50 dividend-paying companies from the S&P 1,500 Composite Index that has increased dividends for at least 20 consecutive years.

Small-Cap/Value Tilt

Selected using a multi-factor modeling approach, the stock is a smaller-cap or value stock designed to enhance portfolio risk/return characteristics.

IPO Index

This strategy tracks a market-cap-weighted index of the 100 largest U.S. initial public offerings (IPOs) over the first 1,000 trading days of each stock. Stocks must pass additional quantitative screens as well.

Spin-Offs

The company has spun away from its parent firm in the last four years. Spin-offs have a solid history of outperforming the broader market.

Recommendation

Buy AbbVie Inc. (ABBV) at market today. Place your initial stop at $54.

Options

With the stock currently in a technical correction. I am holding off on recommending options this week.

Portfolio Update

With the Autozone (AZO) stock now included in only three of the original seven Alpha Algorithm strategies, it is time to say good-bye to this position at a slight loss of 2.13%. Remember to sell your related option positions as well.

Sincerely,

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world. He was the Editor of The Global Guru, a free weekly e-newsletter, and also edited the trading services Momentum Trader Alert, which focused on making short-term profits in the hottest markets in the world, and The Alpha Algorithm, which was designed specifically to deliver big, fast triple-digit winners, month after month. He was also the editor of Smart Money Masters, a monthly service focused on longer term investments recommended by the brightest minds in the business. Mr. Vardy has been a regular commentator on CNN International and the Fox Business Network. He has also published articles in The New Republic, The World and I, and The Baker & McKenzie Legal Review. The Global Guru/Nicholas Vardy has been cited in The Wall Street Journal, Newsweek, Fox Business News, CBS MarketWatch, Yahoo! Finance, and MSN Money Central. Mr. Vardy graduated from Stanford with a B.A. — with honors and distinction — in both Economics and History, and he also earned an M.A in Modern European Intellectual History. After winning a Fulbright Scholarship, he earned a J.D. degree at Harvard Law School where he was an editor of the Harvard International Law Journal. When not uncovering investment opportunities for his subscribers and investors, Mr. Vardy is a keep-fit enthusiast and an avid student of classical music.