Damien Conover: We've just completed a deep-dive analysis on the large-cap pharmaceutical space. From our analysis, we think the group is the best position it has been since 2005, and this has a lot to do with the lack of patent losses coming up for this group.
If you look back at the major patent cliff of 2012, that's finally behind the group. A lot of patents have annualized off. As we look forward, there's not a lot of patent exposure coming up. The group also has very strong pipelines aimed at areas of unmet medical need where products have very strong pricing power and regulatory agencies are more likely to approve the drugs. With this in mind, there are some stocks we think are still underappreciated even though the rest of the group has appreciated a lot over the last two to three years.
The three names we're guiding investors to are Merck (MRK), Bristol (BMY), and Sanofi (SNY)--all three of which have pipelines that are underappreciated and have patent exposure that we think is manageable. This sets these firms up for nice capital appreciation as well as strong dividend yields that should augment the capital appreciation with each one of these stocks.