Investors
Should Pop Pfizer
Into Their Portfolio For
Healthy long-term returns
By Ingrid Hendershot, editor
Hendershot Investments
"Pfizer (PFE $34.60) discovers, develops, manufactures and markets leading prescription medicines, for humans and animals, and also produces many of the world's best-known consumer products, such as Listerine, Benadryl, Halls Cough Drops and Schick razors. Pfizer's largest business, however, is human pharmaceuticals. Pfizer medicines are used to treat cardiovascular diseases, central nervous system disorders, infectious diseases, arthritis, urogenital conditions, allergy, diabetes, respiratory diseases and metabolic disorders.
Market Leader
In
the mid-1840's, two cousins, Charles Pfizer and Charles Erhart,
arrived in America from Germany. In 1849, they combined their
chemistry and confectionary skills and founded a chemical firm,
Charles Pfizer & Company. Over the decades, Pfizer diversified
their operations and gained a reputation for high-quality products.
Today, Pfizer is the world's largest pharmaceutical company with
sales topping $32 billion.
Over the past decade,
Pfizer has generated healthy growth with sales more than tripling
and net income increasing almost eleven fold. Pfizer's strong
growth is a result of a significant investment in research and
development. R&D spending is projected to grow about 10%
in 2002 to $5.3 billion. These R&D efforts have paid off
as Pfizer currently markets eight of the world's 30 best-selling
prescription medicines.
PFE has eight drugs
each generating sales in excess of $1 billion more than
any other pharmaceutical company. These blockbuster drugs include
Lipitor, one of the largest-selling cholesterol drugs; Norvasc,
the world's largest selling drug for hypertension and angina;
Zithromax, a leading antibiotic; Diflucan, a therapy for a wide
range of fungal infections; Zoloft, a leading treatment for depression;
Neurontin, a top-selling drug for epilepsy; Viagra, the most
widely prescribed medication for erectile dysfunction; and Celebrex,
which was discovered and developed with Pharmacia, to provide
relief for rheumatoid arthritis and osteoarthritis.
Strong Cash Flow
Over
the years, Pfizer has generated strong cash flow. Operating cash
flow has steadily grown from $1.6 billion in 1997 to more than
$9 billion in 2001. Free cash flow growth over the same time
has compounded at an even more impressive 78% annual rate.
Pfizer's strong operating
cash flows, substantial cash balances and diversified product
portfolio have earned the company superior credit ratings. Pfizer
is one of a handful of companies to have triple-A credit ratings
from both S&P and Moody's. This puts Pfizer in the company
of other HI-quality firms like Johnson & Johnson,
Merck and Berkshire Hathaway.
With abundant excess
cash, Pfizer has rewarded shareholders over the last five years
by repurchasing nearly $10 billion of its shares and paying $8.6
billion in dividends. Last year, Pfizer announced another $5
billion stock buyback plan. Pfizer has paid a dividend for more
than 63 years, and recently increased the dividend 18%. This
marks the 35th consecutive year with a quarterly dividend increase.
Double-Digit Growth
Pfizer
is targeting continued double-digit revenue growth for 2002-2004.
This growth will be driven by the performance of current products
and new product launches. Pfizer expects to file 15 major New
Drug Applications in the next five years, which could be one
of Pfizer's most productive periods ever. Profit margin expansion
should also continue, driven by productivity initiatives and
the divestiture of lower-margin products. For 2002, Pfizer is
comfortable with EPS estimates between $1.56 - $1.60. For 2003-2004,
management's goal is to achieve EPS growth of 15% or better.
Pfizer's stock price
recently has pulled back along with other large drug stocks over
concerns about patent expirations, FDA investigations and efforts
by states to reign in drug costs. Despite these uncertainties,
Pfizer still appears attractively valued, given its excellent
product portfolio, a broad pipeline, strong cash flow and double-digit
growth expectations. Investors should pop Pfizer into their portfolio
for healthy long-term returns.
Editor's Note: Ingrid
Hendershot is editor of Hendershot Investments, 11321
Trenton Court, Bristow, VA 20136, 1 year, 4 issues, $45.
Channel sampling perpendicular to the strike of the Northern Wall Zone of the Pakeagama Lake pegmatite has returned 1.21 percent lithium oxide, 0.53 percent rubidium oxide, 0.10 percent cesium oxide, 222 g/t tantalum oxide, 107.0 g/t niobium oxide, 0.13 percent beryllium oxide, 35.8 g/t thallium, 56 g/t gallium, 8.1 g/t germanium and 120 g/t tin over 11 metres. Channel sampling across the Core Zone yielded 13.9 metres grading 4.62% lithium oxide. A soil geochemical program is planned to begin in June to further define the known limits of the Pakeagama Pegmatite towards the 700 g/t tantalum oxide showing on the shore of Pakeagama Lake.
Ghost Lake Tantalum Project
Houston Lake has an option to earn a 100 percent interest in the 464 hectare (1188 acre) Ghost Lake tantalum property which covers the Boundary Zone which spans over 3.2 km (2.0 miles) of a newly defined extension of the Cat Lake - Winnipeg River Pegmatite Field, one of most important domains of rare metal (tantalum) mineralization in the Canadian Shield and host to the world-class Tanco tantalum mine. Significant rare element mineralizing systems with appreciable values of tantalum, cesium, beryllium, rubidium and tin have been previously identified during work conducted by the Ontario Geological Survey ("OGS") over the property. Reported values of the OGS include 186 g/t (0.019%) tantalum oxide and 115 g/t (0.012%) tin (E. Berger, 1990) and 179 g/t (0.018%) tantalum oxide (F. Breaks, 1991). The potential of the Ghost Lake property is emphasized by an elevated tantalum to niobium ratio of approximately 3:1 which approaches that of the Company's Pakeagama Lake tantalum mineralizing system. Pronounced and broad lithium (holmquistite) and boron (tourmaline) anomalies are traceable for over 650 metres (2100 feet) on the Ghost Lake property and have been found elsewhere to be important pathfinders to rare metal (tantalum) mineralization. A preliminary exploration program will begin this week and will involve line-cutting, geophysical surveys and prospecting.
Corporate Update
Houston
Lake has received $100,000 in cash payments from Agnico-Eagle
Mines Limited (TSE AGE, NYSE AEM "Agnico-Eagle") in
accordance with the Tib Lake Option Agreement (see Joint Press
Release dated March 8, 2002). Under the first year option requirements
Agnico Eagle is required to spend $500,000 in exploration on
the 1632 hectare (4030 acre) Tib Lake property which is located
in the Thunder Bay Mining District of NW Ontario and will be
the Operator. The Tib Lake property is located in the Lac Des
Iles area just 15 km. (9 miles) from the Lac Des Iles mine of
North American Palladium Ltd. At December 31, 2001, the total
proven and probable reserves, and measured and indicated resources
at the Lac Des Iles mine had increased to 159 million tonnes
averaging 1.55 grams of palladium per tonne containing 8.0 million
ounces of palladium. The Tib Lake gabbro is the second largest
intrusion of the Lac Des Iles suite of rocks and, as such, is
a prime target for palladium-platinum-gold exploration.
Houston Lake is actively
exploring for Gold, Rare Metals, and Platinum Group Metals with
a strategic focus on northwestern Ontario. Houston Lake Mining
Inc. has a total of 15,250,695 common shares issued and outstanding.
The common shares of Houston Lake Mining Inc. trade through the
facilities of the TSX Venture Exchange under the symbol HLM.
For further information on all of the Company's projects, we
invite you to visit us at www.houstonlakemining.com.
For more information
on Houston Lake Mining contact E. Grayme Anthony, B.Sc., P. Geo.,
F.G.A.C., M. B. A., at (705) 897-7622, Fax: (705) 897-7618 or
e-mail: houston@vianet.on.ca
or visit the Web Site at www.houstonlakemining.com.
The TSX Venture Exchange has neither approved nor disapproved of the information contained herein.
