I’d buy this pharmaceutical growth and dividend stock alongside GlaxoSmithKline

This company is making impressive progress breaking into the US market, and the valuation is modest.

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The GlaxoSmithKline share price is at a level that makes the stock attractive to me right now. I like the defensive, cash-generating characteristics of the sector. And, alongside giants such as GlaxoSmithKline, I’m also attracted to smaller-growth and dividend-paying companies like generic medicines provider Beximco Pharmaceuticals (LSE: BXP).

A modest valuation

One of the key attractions is the low-looking valuation. With the shares at 42p, the forward-looking earnings multiple runs close to six for the trading year to June 2020 and the anticipated dividend yield is above 4%. On top of that, the company has been putting in some decent annual advances in earnings and the stock is flying today on the release of the full-year results report, up around 7% as I write.

However, the valuation could be so low because the firm is based in Bangladesh. Some shareholders feel rather insecure about investing in firms based abroad. Indeed, the company reports in Bangladesh Taka (BDT), which could present some risk to shareholders if the BDT falls in value against the pound.

But the BDT has been remarkably stable and is close to the level it was 10 years ago, measured against the value of sterling. Meanwhile, fluctuations appear to have been no more extreme than those we’ve seen by comparing the pound against the US dollar, for example.

Impressive trading

Today’s figures are good. In the trading year to 30 June, overall sales increased by almost 29% compared to the year before. Making up that result, there was a more than 25% uplift in sales to the domestic market in Bangladesh and an increase of just over 69% in exported sales. The company managed to increase its earnings per share by just under 20% and the directors pushed up the total dividend for the year by 20% as well.

I can’t help thinking that if the company was based in Europe or the US it would likely be trading on a higher rating. And the business appears to have both quality and momentum.

During the year, the firm launched 20 new products and completed 77 registrations for 50 products in 23 countries. And business from the US market now accounts for 45% of all the export business, which strikes me as impressive progress in that attractive region.

The potential for growth in the US strikes me as huge, and the fact Beximco has gained some approvals for the highly-regulated market across the pond is encouraging to me. Meanwhile, the company’s record of revenue, earnings and dividend growth has been steady, and it’s possible the valuation could gradually re-rate upwards as the firm gains traction in mature markets such as America.

I’m certainly tempted to buy a few of the shares to see what happens while collecting income from the dividend while I’m waiting.

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.

Kevin Godbold has no position in any share mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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