My Watchlist – October 18, 2010

I have reviewed issue 8 of Value Line and added companies that have exceptional returns on equity. I am moving the posting of this list to Monday in order to make it more timely. The list is not perfect and some judgment is required in deciding whether to include a particular stock. As always, I welcome your feedback and comments.

The idea here is to have a dashboard of substantially all the larger-cap high quality businesses in the U.S. in one place that you can review at least weekly to see what Mr. Market is making available to you.

Here is the updated watchlist.

Stocks Added This Week

AFLAC Incorporated – AFL

E.I. du Pont de Nemours & Company – DD

FMC Corporation – FMC

Abbott Laboratories – ABT

Allergan, Inc. – AGN

Bristol Myers Squibb Co. – BMY

Forest Laboratories, Inc. – FRX

Gilead Sciences, Inc. – GILD

GlaxoSmithKline plc (ADR) – GSK

Hospira, Inc. – HSP

Eli Lilly & Co. – LLY

Merck & Co., Inc. – MRK

Novartis AG (ADR) – NVS

Novo Nordisk A/S (ADR) – NVO

Pfizer Inc. – PFE

Stocks within 10% of a 52-week low:

None

Stocks with an earnings yield greater than 8%:

Gilead Sciences, Inc. – GILD

Eli Lilly & Co. – LLY

Merck & Co., Inc. – MRK

A few thoughts…

The majority of stocks in these sectors are close to new highs and are well above their lows. Some caution is in order.

The pharma stocks exemplify the potential danger of blindly extrapolating past growth rates into the future. Their earnings going forward will not be a function of what they did in the past but what they are able to do in the future. Predicting the future success of these companies’ pipelines is difficult.

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One thought on “My Watchlist – October 18, 2010

  1. Jeffery Lane

    I’ve watched GILD for some time. Strong player in the bio-tech field. They also are at the front of HIV/AIDS vaccine research.

    Reply

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