Some of the steadiest growth stocks lie in pharmaceuticals and agricultural plays, one noted investor said Thursday.
“We know there are patent cliffs on the branded side, and if you look at the expectations, generics are going to grow at about 7.4 percent compounded over the next five years,” Delphi Management founder Scott Black said on “ Fast Money .”
Black, whose company manages $1.6 billion in assets, shared his top picks:
Mylan: “Roughly 91 percent of the revenue comes from generics. It’s selling at a 10 P/E,” he said.
Watson: “Roughly three-quarters of the book is generic. One-quarter is branded,” Black said. Additionally, he expected double-digit growth and prices at 10 times P/E.
Teva: Generics account for 56 percent of its product line. “This stock is a joke. They generate over $3 billion a year in free cash and 20 percent on book and it’s selling at 7.8 times this year’s earnings, which is ludicrous,” he said.
Also with large growth potential ahead were the agricultural and fertilizer sectors.
“If you look at the forecast for population growth, we’re going to go from roughly 7 billion people to 9½ billion people by the middle of this century,” Black said.Page 1 of 3 | Next Page