3 Of The Best Pharmaceutical Stocks That Money Can Buy: GlaxoSmithKline plc, BTG plc And Hikma Pharmaceuticals Plc

These 3 pharmaceutical stocks seem to be well-worth buying right now: GlaxoSmithKline plc (LON: GSK), BTG plc (LON: BTG) and Hikma Pharmaceuticals Plc (LON: HIK)

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

GlaxoSmithKline

When top and bottom line growth are proving elusive for any company, a period of rationalisation and restructuring often follows. That’s the current situation at GlaxoSmithKline (LSE: GSK) (NYSE: GSK.US), where sales and profit growth have stalled in recent years and, as such, the company is considering a spin-off of its star HIV division, ViiV Healthcare. This could create shareholder value in a similar way to that which has taken place at Reckitt Benckiser and Indivior, with the combined market capitalisations of the two companies now being higher than when they were together.

And, with GlaxoSmithKline seemingly having considerable scope to make significant changes over the medium term, its slow-growth profile may not hold back its share price. As a result, now could be a great time to buy a slice of it.

BTG

Although the pharmaceutical sector is often viewed as relatively defensive, BTG (LSE: BTG) remains a high-risk stock. That’s because its bottom line is relatively volatile, although encouragingly for its investors the next two years are set to see it grow by around 93%, which would clearly be a superb result and help to improve investor sentiment.

In fact, investor sentiment in BTG has been somewhat lacklustre in 2015, with the company’s share price falling by 1% since the turn of the year. This, then, could present an excellent opportunity to buy in before everyone else does and, while BTG has a price to earnings (P/E) ratio of 37, it still seems to offer good value for money when its growth potential is factored in.

Hikma

Surprisingly, shares in Hikma (LSE: HIK) have risen by 10% since the turn of the year. That was unexpected because the company is forecast to post a decline in earnings in the current year of 9%, which should (in theory) cause investor sentiment to weaken rather than improve. However, Hikma’s promotion to the FTSE 100 may have caused a surge in buying by tracker funds, which may explain why its shares have been bid up.

Looking ahead, Hikma is expected to bounce back next year with bottom line growth of 18%. And, when this is combined with its P/E ratio of 23.3, it equates to a price to earnings growth (PEG) ratio of just 1.2, which indicates that Hikma’s share price could move significantly higher over the medium to long term.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens owns shares of GlaxoSmithKline. The Motley Fool UK has recommended BTG, GlaxoSmithKline and Hikma Pharmaceuticals. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »

Investing Articles

Investing £5 a day could help me build a second income of £329 a month!

This Fool explains how £5 a day, or one less takeaway coffee, could help her build a monthly second income…

Read more »