The pharmaceutical sector has been on a roller coaster ride over the last several years. As recently as 2016, the industry was getting pinched by the double whammy of pressure to reduce drug costs and a corporate tax structure that was choking off topline growth. In the last year, many of the pharmaceutical companies have seen their stocks go through the roof as a result of the new tax policy. But not every pharmaceutical stock is showing strength.
Make no mistake, this is an industry that every investor – and every consumer – should want to see succeed. These companies are continuously introducing new drugs and treatments for cancer, Alzheimer’s, diabetes, and multiple sclerosis just to name a few. And that’s not to mention the drugs that help us manage our cholesterol, high blood pressure, and depression.
Not to mention, the baby boomer generation continues to reach retirement age. In 2018 alone, over three million people will be reaching retirement age and that pace isn’t expected to slow down significantly until 2029. As the number of retirees expands so too will their need for the products and services that come from this industry.
It’s expensive to develop these drugs, not to mention that it can take years for some of these products to reach the market. Our desire to want to believe in these treatments can allow investors to mistake an inflated valuation for a poor valuation.
But as an investor, we have to perform our due diligence, and there are some stocks that have qualitative or quantitative factors working against them. While the pharmaceutical is always changing, we’re providing a list of seven stocks that, for now, should stay out of your portfolio.
Click the "Continue to Slide #1" button to view the first company.
