U.S. Markets closed

Top Picks 2020- Bristol-Myers Squibb BMY

With politicians on both sides of the aisle calling for drug price controls, and a number of the Democratic candidates calling for “Medicare for all,” it has been a challenging environment for a host of medical sectors, suggests income expert Chuck Carlson, editor of DRIP Investor.

However, you can often find good value in such segments, and Bristol-Myers Squibb (BMY) is a shining example of that value. The stock is a Top Pick recommendation for total return.

See also: Top Picks 2020: MSC Industrial Direct (MSM)

Bristol-Myers Squibb has a number of factors in its favor, not the least of which is solid revenue and earnings growth potential over the next 12 months, an attractive dividend yield of nearly 3%, and a potential kicker in its recent acquisition of Celgene.

Bristol-Myers Squibb is a leading provider of pharmaceuticals. Leading brands include OpdivoEliquisPlavixOrencia, and Yervoy. Revenues will grow sharply with the addition of Celgene.

The addition of Celgene will push annual revenues over $40 billion and give the combined company the number one position in oncology and cardiovascular drugs. Celgene will bring onboard a decent new-product pipeline, which increases the opportunities for finding the next blockbuster drug.

Bristol-Myers Squibb shares trade for just 10 times the 2020 earnings estimate, so investors aren’t paying much for the expected growth.

Bristol-Myers is taking on a big chunk of debt to pay for the Celgene deal. Despite the increased debt load, the company just raised its dividend approximately 10%, indicating the firm is fairly confident in its future.

See also: Top Picks 2020: MasTec (MTZ)

Bristol-Myers stock traded in the low $70s in 2018 and was a $77 stock as recently as 2016. I think expected appreciation in the 10%-15% range plus a nearly 3% dividend yield sets up for a nice total return in 2020.

The stock has shown much better price action in recent months, and I expect these shares to outperform the market over the next year. Please note Bristol-Myers Squibb offers a direct-purchase plan whereby any investor may buy the first share and every share directly from the company.

More From MoneyShow.com: