The Motley Fool: Pfizer’s drug pipeline is an envious mix fighting heart disease, cancer and diabetes and others

The Motley Fool Take

There’s a lot to like about Pfizer (NYSE: PFE) these days. For starters, there’s diversification, which expands Pfizer’s growth opportunities while reducing its risk.

Back in 2000, one drug, Lipitor, accounted for 17 percent of Pfizer’s total revenue. Six drugs generated almost half of the company’s total revenue. Today, Pfizer’s top-selling product, pneumococcal conjugate vaccine Prevnar/Prevnar 13, makes up less than 12 percent of Pfizer’s total revenue. The company’s top six products produce less than a third of total revenue.

Pfizer is tackling many areas, such as cardiovascular diseases, infectious diseases, central nervous system disorders, diabetes, autoimmune diseases, rare diseases and cancer.

Drug companies’ futures are tied to their pipelines, and Pfizer’s is strong, with more than 90 clinical programs - close to half of which are either in late-stage development or in the regulatory approval process.

The company is aggressively developing partnerships and making strategic acquisitions, too. The two big buyouts last year of Medivation and Anacor allowed Pfizer to pick up prostate cancer drug Xtandi and eczema drug Eucrisa. Each of these acquired drugs could bring in annual revenue of $2 billion or more.

Pfizer has also been returning a lot of money to shareholders in the form of stock buybacks and dividends. Its payout recently yielded 3.8 percent. With its broad portfolio and pipeline of potential, Pfizer appears to be a value hiding in plain sight.

Ask the Fool

Q: When company insiders sell millions of shares of company stock, who are the buyers? - E.B., Riverside, California

A: Shares sold by insiders such as officers, directors or owners of a company are sold in the open market, where anyone with a brokerage account can buy them. Of course, if there are many more shares for sale than there are interested buyers, the price will drop - until it reaches a point at which buyers will buy.

Several million shares certainly seems like a massive amount, but remember that many companies have billions of shares, and in the course of a typical trading day, many have a high volume of trading. In recent months, Microsoft’s average daily volume was about 23 million shares, while Bank of America’s was around 90 million.

It can be smart to examine insider purchases and sales for companies that interest you. Some occasional selling is routine, as many insiders get much of their compensation in the form of stock and must sell shares occasionally to generate cash. When insiders buy shares, it’s generally a bullish sign - but one or more insiders unloading a large portion of their shares can be worrisome. You can look up insider transactions at websites such as finviz.com/insidertrading.ashx.

Q: What do “trade date” and “settlement date” mean on my brokerage statements? - T.H., Victoria, Texas

A: When you place an order to buy or sell a security with your broker, there will be a trade date and a settlement date. The trade date is the date the order was executed, and it’s the one that counts for tax purposes. The settlement date is when the cash or securities from the transaction arrive in your account.

My Dumbest Investment

I can’t pinpoint one exceptionally poor investment, as I’ve made so many, but I do have one major regret. I’ve been actively investing for 40 years. Had I never sold any of the stocks I purchased 30 or more years ago, I’d have wealth now - beyond my wildest dreams. Sure, I would have had some big losers, but the winner would have more than made up for them.

I’ve learned that if a company is fundamentally sound, which more often than not has nothing to do with its earnings reports over a one-year period or even a five-year period, I need to be patient and occasionally use sharp stock-price declines as opportunities to buy more shares.

Of course, now I don’t have 30 or 40 more years to look forward to, but I still love the stock market. I’m fortunate to be very comfortable. I subscribe to Warren Buffet’s philosophy on when one should want to sell a stock: never. - R.G., Anacortes, Washington

The Fool responds: Being impatient and having a short-term mentality are two surefire ways to hurt your investing performance. But never hold on to a stock blindly, without keeping up with its progress - if its prospects dim, you need to notice. Nevertheless, long-term investments are often the best wealth builders. Five thousand dollars invested in PepsiCo 40 years ago would top $400,000 today.