Top Investment Picks for 2017

Rasec @ DGF: Gilead Sciences Inc (GILD)

“My vote goes for GILD, insanely low valuation, lots of cash in hand, almost -28% YTD returns in 2016… it “has” to go up. I predict +35/40% in 2017. At +40% it would still trade at a P/E around 9ish at 2016 earnings. Same as CVX last year, I’m putting my money where my mouth is and I already am heavy on GILD and I keep buying more.”

Rocco Matteo: Magna International Inc (MG.TO)

“Great balance sheet and trading at 8X earnings , cheap valuation with good upside in next 12 months”

Retire Before Dad: Nike Inc (NKE)

“After choosing a high-risk/bad-performing stock in 2016, Lending Club (LC), I’m going with a more traditional dividend growth pick this year. My choice is Nike (NKE). The stock was down around 20% for 2016. The company has a dividend growth streak of 15 years, with an average increase of 15% over the past 10 years. It’s forward PE ratio is just under 20 and the dividend payout ratio stands around 29%. Strong balance sheet. Powerful brand.”

Roadmap2Retire: Market Vectors Junior Gold Miners ETF (GDXJ)

“Instead of picking one stock, I have decided to go with an ETF instead. I am bullish on the precious metals space as I believe both gold and silver are undervalued and have plenty of room to run. What better way to gain exposure than a mining company which provides leverage to the underlying metal price. Instead of picking one company, whose performance can swing wildly, I choose GDXJ as it provides exposure to 52 great junior/midcap mining companies in the gold and silver space. Headwinds include continued strength in US$, but if the rest of the market falters, gold and silver should see a nice leg up.”

RyanCMason @ DGF: Nike Inc (NKE)

“I really like NKE. I wouldn’t say it is cheap but is fair value from its historical range and earnings are still growing 10% annually. I am looking forward to adding to my position”

Tawcan: Novo Nordisk A/S (NVO)

“Novo Nordisk saw a bit of headwind in 2016 and I feel the tide has turned for NVO. NVO is the lead producer of the diabetes insulant medicine which should help them increaes the profits moving forward”

Blog reader Al: Novo Nordisk A/S (NVO)

I was perusing the Denmark EDEN etf for an eventual investment after
it’s recent price collapse, when I saw that they had NOVO NORDISK as
biggest holding at 30%. Went to Yahoo Financials, and on the Novo
Nordisk website to dig a bit further down on this specific stock.

I think I found an interesting one…

Novo Nordisk is a pharma sector corp with 42 600 workers, and market
leader in diabetes care, which is a global pandemic. They are a
Denmark based corp that does over 50% of business in the USA alone,
and the rest in Europe and Asia.

What you need to know from the 20-F document page 3 year 2015 with
link hereunder:

From 2011 to 2015, evolution:
. # shares outstanding from 2900 to 2600 million (share buyback
program in place)
. net sales from 66 to 107 Billion
. net profit from 17 to 34 Billion (30% plus NET profit margins…)
. earning per share from 6 to 13,5
. dividend per share from 2,8 to 6,4
. Cash holding much more than 10Billion and debt 1Billion.
. ROE above 70%
. Share buyback program of 4,5 Billion started in October 2016

Now, that’s what I call a proper profit machine…

Now the “bad” news:
1/ their very long term CEO is going into retirement end this month,
and is replaced by a younger man who has been at novo nordisk since
1991
2/ their intended yearly sales growth rate has been decreased from 10%
to 5% at Feb 2016, given the health care billing issues in the USA,
where their products are under FDA pricing pressure, to reduce costs.
3/ result: stock chart from $57 at peak 2015 to now $35 (-40%) but
turning back up on the OTC market.
4/ They are firing 1000 people to increase profits, since salaries are
their main expense
5/ many new products in the pipeline, but most are being reviewed by
the FDA, who is now stalling things, given Trump’s Billionaire Club
arrival and change of guard at the FDA.
6/ The basic evaluation metrics are expensive, but acceptable for such
a fast grower. Even if stock price does not move much for a few years,
given their ROE, they will then be dirt cheap in 4 years max.
Gurufocus shows that it is a financially very strong company active in
a solid still growing market where it occupies a market leader
position with few competitors, thus it has a long term moat.

http://www.novonordisk.com/content/dam/Denmark/HQ/Commons/documents/AR2015%20files/Form%2020-F-AR2015.pdf

http://www.novonordisk.com/about-novo-nordisk/novo-nordisk-in-brief/facts-and-figures.html

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22 thoughts on “Top Investment Picks for 2017

  1. These exercises are always fun to do and see how our picks fare over the year. Of course, near term it’s anyone’s guess as to what will perform best but it was nice to see quite a few health/biotech picks among our peers. Between CAH, JNJ, GILD, CVS and my CCP it seems like health was a definite theme. Good luck to all in ’17!

  2. Guy Knight says:

    Thanks for the list and justifications. Glad to see I already own a few of these. My personal choice for 2017 is an Australian nanotech company called Starpharma. In the long term, its dendrimer technology shows huge promise to make a wide variety of drugs work better at lower dosages and with fewer side effects. Should this prove to be the case, these qualities could improve existing drugs that are off patent, thereby qualifying them as new formulations and worthy of new patents. In the short term, the company has multiple products newly for sale or for some time in 2017. The first product is its Vivagel-coated condoms that that have been shown in the lab to kill viruses such as HIV and HPV. These are for sale in Australia and approved for sale in Canada, Iran, and China with likely more countries to follow. Another product that will be for sale soon is Vivagel to treat bacterial vaginosis. It is a new class of treatment that appears to have a huge demand, since current treatments are severely lacking. In addition, they have clinical trials ongoing, with milestone payments from Astrazenica that will come due. It’s a speculative investment in a currently unprofitable company that may very well show its first profit this year. I own shares in this company.

    • You are welcome, Jay. An interesting pick from you — CGC has been garnering a lot of attention from the followers of the sector. Traditional valuation models make me balk at the current price though 🙂

      R2R

  3. Thanks for asking me to participate, looks like I had plenty of company with my Gilead Sciences pick. A nice collection of stocks here, will be interesting to see which one comes out on top.

    Eric

  4. Thanks for including me in this again. Let’s see if I can win this thing twice in a row! Crossing my fingers for DEO!

    Sincerely,
    ARB–Angry Retail Banker

  5. Thanks for compiling the list and including me. 🙂 Wow. It’s only the first week of January and some of those names are already up double digits! Looking forward to see how everything turns out by year’s end.

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