Author: Noah Kiedrowski

CVS - An Undervalued Healthcare Juggernaut

Posted on by Noah Kiedrowski

Noah Kiedrowski - INO.com Contributor - Biotech


Introduction

CVS presents a compelling investment opportunity in the healthcare space. CVS has been highly acquisitive, growing its dividends over time and has an aggressive share buyback program in place. CVS is currently the largest prescription drug dispenser and the second-largest pharmacy benefits manager. Along with its recent acquisitions and partnerships will significantly expand its footprint and ability to dispense prescriptions to the general public and in assisted living and long-term care facilities that serve the senior patient population. As the United States continues to absorb an aging population alongside growing overall healthcare costs, more specifically prescription drug costs, CVS looks poised to benefit and continue to outperform the broader market.

CVS Health – A true healthcare company

Approximately one year ago, CVS announced that it had removed all tobacco products from its stores nationwide and would no longer sell any tobacco related products to its customers. This was a bold move as CVS has become the trailblazer in establishing itself as a true health oriented company. Ceasing tobacco sales negatively impacted overall sales, however, this move established itself as a true healthcare focused company. "One year ago, we stopped selling tobacco products because it conflicted with our purpose of helping people on their path to better health," said Troyen A. Brennan, M.D., M.P.H., Chief Medical Officer, CVS Health. "Today, we are excited to release new data demonstrating the positive impact our decision has had on public health overall as shown by a measurable decrease in the number of cigarette purchases across all retailers." Personally, I like companies that stand behind their name and practice what they advocate and, in this case, it's promoting overall health and wellbeing. Continue reading "CVS - An Undervalued Healthcare Juggernaut" →

Navigating Volatile Markets Via Coupling Dividends And Share Buybacks - Part 3

Posted on by Noah Kiedrowski

Noah Kiedrowski - INO.com Contributor - Biotech


Introduction

The broader indices have been highly volatile recently due to weakness in China, an imminent Federal Reserve rate hike and persistently low oil prices. Navigating these volatile markets can be difficult. I posit that via investing in high-quality companies that offer the combination of high-quality dividends along with share buybacks may position an investor to contend with this volatility while potentially being rewarded handsomely during bull markets. On the front half of this dual synergy is the dividend space. This space offers many quality attributes such as decreased volatility, healthy yields, moderate risk exposure and a hedge against downside risk thus may be an ideal synergy for any long portfolio. Historically, companies that have an established track record of not only paying dividends but growing their dividends over the long-term have generally outperformed their respective index with decreased volatility. On the back half of this synergy is share buybacks. Share buybacks can serve as an effective way to drive shareholder value via returning capital to shareholders by repurchasing its own stock.

At times, I'll be using both The Vanguard High Dividend Yield ETF (VYM) and The PowerShares Buyback Achievers ETF (PKW) as proxies for this analysis. I will also select specific high-quality companies to exemplify these attributes. The combination of VYM and PKW may present an ideal investing strategy in which to invest and potentially capitalize on a cohort of companies that engage in both dividends and aggressive share buyback programs, particularly in these volatile markets. This article caps off a three-part series focusing on navigating volatile markets while focusing on high-quality companies that pay out dividends and engage in aggressive share buybacks. This series is primarily focused on these attributes utilizing ETFs as proxies to exemplify the mitigation of downside risk while being well positioned in bull markets. Continue reading "Navigating Volatile Markets Via Coupling Dividends And Share Buybacks - Part 3" →

Navigating Volatile Markets Via Share Buyback Investing - Part 2

Posted on by Noah Kiedrowski

Noah Kiedrowski - INO.com Contributor - Biotech


Introduction

Share buybacks can serve as an effective way to drive shareholder value via returning capital to shareholders by repurchasing its own stock. Share buybacks are primarily driven by companies that strongly feel their shares are undervalued based on current fundamentals, future growth prospects and cash on hand. Taken together, executive boards approve share buyback programs based on these attributes in concert with undervaluation on the open market. Additionally, the company of interest feels a sense of bullishness and confidence on the future and sustainability of their business.

Theoretically, repurchasing and retiring shares satisfies many shareholder friendly objectives:

1) Reducing the number of shares tilts the supply and demand curve thereby removing shares will decrease supply and in turn increase demand and drive the share price higher

2) Earnings per share increase since earnings are now dividend over fewer shares

3) If share buybacks are coupled with a dividend, the dividend yield may increase if the aggregate quarterly payout amount remains unchanged thus; as a result the payout will be divided over fewer shares.

I'll be using The PowerShares Buyback Achievers ETF (PKW) as a proxy for this analysis. PKW focuses on U.S. companies that have reduced their shares outstanding by at least 5% in the previous year and weights these holdings by market capitalization, subject to a 5% cap within the ETF portfolio. PKW may present an opportunistic niche in which to invest and potentially capitalize on a cohort of companies that engage in aggressive buyback programs, particularly in these volatile markets. Continue reading "Navigating Volatile Markets Via Share Buyback Investing - Part 2" →

Navigating Volatile Markets Via Dividend Investing - Part 1

Posted on by Noah Kiedrowski

Noah Kiedrowski - INO.com Contributor - Biotech


Introduction

Dividend investing doesn't offer the most exciting means in which to invest these days when compared to stocks such as Netflix, Facebook or Amazon or sectors such as the biotechnology sector. Despite this lack of excitement, when considering the attributes this dividend space offers, such as decreased volatility, healthy yields, moderate risk exposure and a hedge against downside risk, it may be an ideal synergy for any long portfolio. This is especially true as the markets have been highly volatile due to weakness in China, an imminent fed rate hike and persistently low oil prices. Historically, companies that have an established track record of not only paying dividends but growing their dividends over the long-term have generally outperformed the their respective index with decreased volatility. I'll be utilizing The Vanguard High Dividend Yield ETF (ticker symbol: VYM) as a proxy for a high-quality cohort of large-cap centric dividend paying stocks. This type of dividend portfolio may prove to be a meaningful piece of an overall growth retirement strategy while providing a reasonable level of income and mitigating risk. The allocation within VYM offers a broad dividend paying portfolio and access to all sectors throughout the large-cap space without sacrificing diversification and in turn can generate sustained long-term growth and income while navigating volatile markets.

High-Level Overview

• The dividend space offers many long attributes: decreased volatility, healthy yields, moderate risk and a hedge against downside market swings.

• Dividend investing often gives rise to share buybacks, rendering an effective way to drive shareholder value via returning capital by repurchasing stock.

• VYM has outperformed the S&P 500 in past two down markets in 2008 and 2011 by 4.9% and 8.4%, respectively.

• VYM has more than doubled its dividend payouts over the past 5 years.

Mitigating risk and volatility with a high-quality cohort of dividend paying stocks

VYM is composed of high yielding dividend-paying large-cap companies and weighted by market capitalization. This domestically focused dividend paying ETF provides access to some of the biggest names across many different sectors that provide a healthy dividend yield, equity appreciation, diversification and decreased volatility. Continue reading "Navigating Volatile Markets Via Dividend Investing - Part 1" →

Extraneous Events Providing Unique Buying Opportunity In The Biotechnology Cohort

Posted on by Noah Kiedrowski

Noah Kiedrowski - INO.com Contributor - Biotech


Introduction

The culmination of sustained lower oil prices, fear of an imminent rate hike and weakness in China have indiscriminately plummeted all indices over the past week. These exogenous forces are ostensibly unrelated to the biotechnology cohort yet this group has been taken along for the downhill ride with the broader indices in lock-step. The biotechnology sector has been on an unprecedented performance streak in both annual and cumulative performance over the past 10 years and accentuated during the latest 5 year timeframe however lately this streak has been tested. The biotechnology sector can be highly volatile, however I posit that this cohort has not only established itself as a secular growth sector but these latest events are unrelated to the biotech sector and thus this recent correction may provide a unique opportunity to add to a current position or initiate a position over time as this correction unfolds. Based on annual and cumulative performance throughout both bear and bull markets, IBB (iShares Nasdaq Biotechnology) may provide the opportunity investors have been waiting for in the face of our current market conditions. IBB is down 15% from its 52-week high, shares have plunged from $400 to $340 per share during the recent market weakness, presenting a potential buying opportunity. Continue reading "Extraneous Events Providing Unique Buying Opportunity In The Biotechnology Cohort" →