Bristol Myers Squibb
Value stocks have always been a big theme for Warren Buffett, and that's exactly what investors are going to get with pharmaceutical stock Bristol Myers Squibb (NYSE:BMY).
Like most healthcare stocks, Bristol Myers' products are highly defensive. This is to say that a stock market decline or even an economic contraction won't adversely affect demand for its pharmaceuticals. Since we don't get to choose when we get sick or what ailment(s) we develop, drugmakers like Bristol Myers usually offer highly predictable cash flow.
One company-specific reason investors can buy this Warren Buffett stock hand over fist for the fourth quarter is its organic growth opportunity. Eliquis, which was developed with Pfizer, has become the most-popular oral anticoagulant in the world and should bring in more than $10 billion in sales for Bristol Myers Squibb this year. There's also cancer immunotherapy Opdivo, which I believe offers even more long-term opportunity. Although Opdivo flamed out in advanced lung cancer trials a few years back, it's being examined in dozens of clinical trials and has a very good chance to generate billions in added annual revenue via label expansion opportunities.
Bristol Myers' acquisition of cancer and immunology drugmaker Celgene in late 2019 gets high marks, too. Buying Celgene brought multiple myeloma drug Revlimid into Bristol's portfolio. Revlimid brought in over $12 billion in sales last year, and has a track record of maintaining double-digit annual sales growth. This key therapy is protected from an onslaught of generic competition until the end of January 2026.
There aren't many better values right now than Bristol Myers Squibb at less than 8 times Wall Street's forward-year earnings forecast.