Pat McKeough responds to many personal questions on specific stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions.
This past week, one Inner Circle member asked about one of the dividend stocks in his portfolio. Pat replies with a look at whether this leader in diabetes products can sustain its growth with new products and expanded international markets.
Q: Hi Pat: Novo Nordisk has a strong history of raising its dividend. I own it now, but would like your advice on how the future looks.
A: Novo Nordisk A/S (ADR symbol NVO on New York; www.novonordisk.com), is a major Denmark-based producer of diabetes-care products, including insulin. It also makes products for hormone replacement therapy and treating coagulation disorders.
The company controls 50% of the global insulin market. It gets 40% of its sales from North America, followed by the European Union, 29%; Japan and Korea, 9%; China, 8%; and other regions, 14%.
Novo’s shares have moved up since late last year on higher profits and sales.
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Dividend stocks: Earnings expected to rise with newest diabetes product
The company’s earnings should continue to increase this year. That’s partly because of higher sales at the Diabetes Care division thanks to the success of its newest product, Victoza, a once-daily treatment for Type 2 diabetes.
Victoza’s sales more than doubled last year, to just over $1 billion, making it responsible for 55% of Novo’s overall sales growth. The company launched Victoza in China in the fourth quarter of 2011.
Novo also has a number of products that are nearly ready to go on sale: it submitted its new, longer lasting insulins, Degludec and Degludec-Plus, for U.S. and European regulatory review last year. More recently, it filed for marketing approval for these products in Canada, Japan and Switzerland.
Novo’s shares now trade at 25.2 times this year’s forecast earnings of $5.65 a share.
In the most recent Inner Circle Q&A, Pat looks at whether Novo’s high price-to-earnings is justified by the company’s growth prospects and whether its shares can keep on rising. He concludes with his clear buy-hold-sell advice on the stock.
Inner Circle members see Pat’s analysis and recommendations on the stocks that other members have asked about in each week’s Inner Circle Q&A. You can view it immediately when you become a member of this unique investment group. You will get Pat McKeough’s answers to your personal investment questions, full access to our members-only Inner Circle website, and many other membership privileges. Click here to get started right away.
(Note: If you are a current member of the Inner Circle, please click here to view Pat’s recommendation. Be sure to log in first.)
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