Customer Service 1 (888) 261-2693
Advanced Search

Why Would 9-Year-Olds Sing About Erectile Dysfunction?

By Jeff Clark
Thursday, January 22, 2009

Last Sunday night, I heard singing coming from the upstairs bedroom. My nine-year-old son, Grant, was having a sleepover with two of his best friends. All three of them would sing a little, then laugh a lot, then sing a little again, and laugh a lot again.
 
I couldn't quite make out the song, so I went upstairs to hear a bit better.
 
"Viva... Viva... Viagra!" It was Pfizer's twisted melody of an old Elvis Presley song.
 
Why would three nine-year-old kids be singing about erectile dysfunction? Because they had seen the commercials during the NFL championship football games earlier in the day.
 
They could just as easily have been singing about beer, heavy-duty trucks, or nacho-flavored potato chips. But they keyed into Viagra.
 
"Because," as Grant explained, "it's a good song."
 
Hmmmm... But is it a good stock? It's been quite some time since I took a look at Pfizer (PFE), the pharmaceutical company that manufactures Viagra. And if an advertising campaign can get three nine-year-olds singing about the top-selling drug, maybe the stock is worth singing about, too.
 
Or maybe not.
 
Pfizer has been a dead stock for the past nine years, dropping from a high of $40 in 2000 to a low just above $14 last November. Since then, however, it has bounced back to $17.50. And unlike most other stocks in the S&P 500, it has held most of its post-November gains.
 
PFE trades at 11 times earnings, which isn't necessarily cheap. But get this: Those earnings actually grew 63% during the first nine months of 2008 compared to the same nine-month period in 2007.
 
The company pays a 7.4% dividend. And it holds nearly $4 in cash for every share.
 
Yes, its drug pipeline is drying up and several of its top-selling drugs are coming off patent in the next few years. So Pfizer is going to have to use some of its cash hoard to buy a few smaller companies and boost its product catalog.
 
Nonetheless, with a modest price/earnings ratio, a fat dividend, a high rate of earnings growth, and its recent outperformance of most of the S&P 500, shares of Pfizer just might make a decent long-term investment.
 
PFE is scheduled to announce earnings next Wednesday before the market opens. It's a little too risky to buy stocks just ahead of their earnings announcements. So I wouldn't pull the trigger yet.
 
But if the earnings are anything to sing about, then maybe the stock will be, too.
 
Best regards and good trading,
 
Jeff Clark




In The Daily Crux Recent Articles
Market Notes
Power-plant builder Shaw Group near a three-month high... up 30% this year.
 
Economic bellwether General Electric hits 13-year low.
 
World's largest oil-services company, Schlumberger, hits four-year low... down 66% from 2008 high.
 
Earnings today... Advanced Micro, Capital One, Google, Lockheed, Microsoft, Nokia, Potash, Southwest Airlines.
Market Watch
Symbol Price
Change
52-Wk
S&P 500 1221.53 +1.3% +10.1%
Oil 38.31 +1.4% -0.6%
Gold 138.07 +2.1% +16.3%
Silver 28.60 +2.4% +53.6%
US-Dollar 80.67 -0.8% +8.1%
Euro 1.32 +0.6% -12.1%
Volatility 18.01 -7.1% -19.8%
Gold Stocks 581.56 +3.0% +17.0%
10-Year Yield 3.02 +0.7% -10.7%

World ETFs
Symbol Price
Change
52-Wk
USA 122.89 +0.3% +11.3%
Canada 30.50 +0.2% +16.2%
Russia 21.94 +1.4% +18.1%
India 37.85 +0.3% +22.3%
Israel 16.69 +1.3% +10.8%
Japan 10.64 +0.6% +6.5%
Singapore 13.73 -1.1% +18.8%
Taiwan 14.78 +0.4% +19.2%
S. Korea 57.31 +1.3% +23.4%
S. Africa 71.87 +1.4% +28.2%
China 44.42 -1.4% -0.6%
Lat.America 53.17 +0.7% +8.4%

Sector ETFs
Symbol Price
Change
52-Wk
Oil Service 137.59 +1.0% +18.9%
Big Pharma 64.14 +0.0% -3.2%
Internet 72.07 -0.1% +23.4%
Semis 16.22 +1.2% +29.4%
Utilities 31.28 +0.2% +1.5%
Defense 18.52 +0.1% +10.6%
Nanotech 10.03 +0.4% +1.6%
Alt. Energy 10.08 +1.3% -3.3%
Water 18.49 +1.0% +14.5%
Insurance 16.14 +0.4% +21.1%
Biotech 20.54 -0.2% +28.1%
Retail 19.70 +0.3% +30.2%
Software 24.79 +0.8% +25.9%
Big Tech 53.87 +0.3% +22.7%
Construction 13.10 +0.9% +15.7%
Media 13.64 +0.5% +26.0%
Consumer Svcs 67.39 +0.2% +24.5%
Financials 55.04 +0.3% +7.4%
Health Care 64.30 +0.1% +2.0%
Industrials 63.54 +0.5% +21.0%
Basic Mat 74.35 +1.1% +25.3%
Real Estate 55.32 +0.1% +25.0%
Transportation 91.77 +0.7% +26.9%
Telecom 22.59 +0.5% +17.8%