FV This Stock Should Be On Your Radar: It’s Selling At A 10% Discount And Rated A “Buy”

There’s a common misperception among investors. This misperception is that you have to look far and wide for great long-term investment ideas. It’s as if blue-chip companies that are household names can’t continue to do well over the long run. But that’s silly on its face. The reason a blue-chip company becomes a household name is that it’s a wonderful business.

It should be obvious that wonderful businesses make for excellent long-term investments. After all, what’s the alternative? Awful businesses?

One of the best things about truly wonderful businesses is how often they directly reward their shareholders with growing dividends. See what I mean by perusing the Dividend Champions, Contenders, and Challengers list. A growing dividend is tangible proof of growing profit. And growing profit is the result of running a wonderful business. This straightforward logic is a key tenet of the dividend growth investing strategy, which is a strategy I’ve been following for more than 10 years. It’s treated me well. Amgen, Inc. (AMGN) is a global biotechnology company that develops and manufactures a range of human therapeutics.

Founded in 1980, Amgen is now a $137 billion (by market cap) healthcare colossus that employs more than 24,000 people. Amgen offers treatments for a range of ailments, including anemia, rheumatoid arthritis, psoriasis, cancer, and osteoporosis. FY 2020 total product sales break down geographically as follows: the US, 74%; Rest of World, 26%.

A world-class biotechnology business like this is an obvious business to invest in. With the world growing bigger, older, and richer, demand for high-quality healthcare (including drugs) is sure to rise. CFRA is another professional analysis firm, and I like to compare my valuation opinion to theirs to see if I’m out of line. They similarly rate stocks on a 1-5 star scale, with 1 star meaning a stock is a strong sell and 5 stars meaning a stock is a strong buy. 3 stars is a hold. CFRA rates AMGN as a 4-star “BUY”, with a 12-month target price of $270.00. I came out high, surprisingly.

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