Investing in a pharmaceutical exchange traded fund (ETF) could be a good idea. For one, pharmaceuticals can show earnings and dividends through highs and lows. Also, valuations are low and much of the shortfall from patent expirations will be offset by new drugs. Seeking Alpha writes that pharmaceuticals is one of the strongest industries around, with high returns on investment capital and the best company survivorship rates.
If you are looking to invest in pharmaceutical ETFs, there are a few options. Pharmaceutical HOLDRs (PPH), iShares Dow Jones U.S. Pharmeceuticals (IHE), PowerShares Dynamic Pharmeceuticals (PJP), SPDR Pharmeceuticals (XPH) and iShares S&P Global Health Care (IXJ). Take a look at what is in the ETF, as Johnson & Johnson (JNJ), Pfizer (PFE) and Merck (MRK) tend to be the top holdings in these ETFs.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.