MENU

Why GlaxoSmithKline Plc Excites Investors Like Me

I’m always fascinated by developments in science and medicine. Indeed, although I do not have a background in either field, I have first-hand experience of the wonders of drugs and various treatments. I’m amazed at how such areas have improved during my lifetime.

So, news that the prospect of using electric implants to treat a wide range of diseases (including arthritis) has taken a big step closer to reality is great news for the world and also great news for investors in GlaxoSmithKline (LSE: GSK) (NYSE: GSK.US).

This is because GlaxoSmithKline has launched a $50mn venture capital fund to “invest in companies that pioneer bioelectronic medicines and technologies”. The company will also build-up its own research expertise in this area, which is good news for shareholders.

Indeed, GlaxoSmithKline is aiming to have the first medicine that “speaks the electronic language of our body” ready within a decade. This is really exciting news, not just for patients, but for shareholders in GlaxoSmithKline as well.

The reason this is good news is that the company continues to push the boundaries of research and development and, in doing so, puts itself in a hugely coveted position as one of the world’s leaders in this field. Doing so increases the barriers to entry to the industry, equating to higher margins and profits for shareholders like me.

In addition to the above developments, GlaxoSmithKline remains one of my favoured income plays. It currently offers a yield of 4.4% and trades on a price-to-earnings ratio of 14.8, which — when compared to the FTSE 100 on 15.1 and the healthcare sector on 17.5 — looks very good value indeed.

Furthermore, shares are forecast to grow at an annualised rate of around 6% over the next two years. While this is not mind-blowing, it’s steady and very achievable.

Although a yield of 4.4% is twice as good as anything you can get from a savings account, you may wish to look at another high-yielding stock. It’s best described as The Motley Fool’s Top Income Share Of 2013.

I’d recommend you take a look by clicking here – it’s completely free to do so!

> Peter owns shares in GlaxoSmithKline. The Motley Fool has recommended shares in GlaxoSmithKline.