Sometimes, a run just sneaks up on you and you don't see it until it is too late and you miss the whole darned thing.
That's how I feel about this stealth move in the drug stocks. We keep seeing individual drug stocks running and we want to ascribe the moves to incidences and strengths that are directly related to the companies themselves.
Take Pfizer (PFE) . This stock has been a banshee, an amazing move, especially because of the booster talk and how COVID's delta variant has given it a 2022 tailwind. That will really help as key patents lose exclusivity and make for a multi-year move.
But wait a second. Pfizer may have the boost it needs from the booster. That's not what Johnson & Johnson (JNJ) has. It has the other side of the trade, getting to be the one that many people fear does not provide the protection that Pfizer has, especially against the delta variant -- some say it is much less effective -- even as it has been excellent at keeping people from severe illness.
So what's this stock's excuse for moving up in tandem with a company that's doing better than it in fighting COVID?
Simple: This is a group move, not an individual move. It has to do with the election and how the politicians, after so much posturing about reining drug prices in aren't doing anything at all. This one feels like the multi-year move the drug stocks had in the early '90s after Clinton bashed them in a speech given at Merck's (MRK) New Jersey Headquarters. His inability to follow through invited a rally of immense proportions.
That's what's really driving these stocks: election relief. They could be offering very little that's of import, as is the case with the sleepy Bristol-Myers (BMY) and it doesn't matter, the stock is red hot just touching its 52-week high. Don't get me wrong; I like the consistency and the dividend of Bristol-Myers and think it will win its share of anti-cancer business, plus its Eliquis anti-coagulate is a genuine blockbuster.
But should it be up here? Yes, if you think we are all going to pay a higher multiple now that the Democrats seem to be turning a blind eye to the group.
How about this one? Not that long ago Elliott, the aggressive hedge fund, started calling for big governance changes at GlaxoSmithKline (GSK) . The stock had been a terrible laggard. Now it is on fire.
Or Eli Lilly And Co. (LLY) . You are paying 37-times earnings, because you believe that the Alzheimer's drug rolls back plaque and can potentially reverse that dreaded disease some day. But if you look at the action in that stock, some day is now. It seems to bullish to me, but anything's possible.
Regeneron (REGN) just hit an all-time high, and, why not, it's got a successful treatment for those who get COVID? Again, though not that long ago this company was on the hotseat for charging a great deal for a cholesterol drug. I don't hear any anti-Regeneron talk now.
Finally there is the sneaky AbbVie (ABBV) , which has moved up well with the possibility of Rinvoq -- a key drug to replace lost humira revenues -- getting U.S. approval shortly. Lowest multiple, highest dividend -- it's a big stock for my charitable trust, which you can follow at Action Alerts PLUS member club.
This move isn't over. I could argue given the low valuations, still, it's the third inning and no more.
I like that. Lot of baseball left to play.