If you’re not feeling well, then your Doctor might tell you to take 2 aspirin and call him in the morning. (Or these days, they might ask you to email them given the necessity for social distancing 😉

However, when it comes to the ails of this stock market, the solution might be a dose of pharmaceutical stocks given their defensive properties in troubled times. Yet the necessity of that prescription is magnified now given that the root cause of the market crisis is a worldwide health scare.

In reviewing the medicine cabinet full of pharmaceutical choices, I think these 3 are the best ones to take at this time: Eli Lilly (LLY), Novartis (NVS), and Sanofi (SNY).

Here is why…

Eli Lilly and Company (LLY)

LLY has shown amazing resilience over time with regular price returns being strong. Over a five-year period, LLY has shown a price return of 112.75%. But even more impressive is the 9.44% gain year to date in the face of all this market turmoil. This strength explains why shares are sporting a POWR Rating of B (Buy).

LLY is historically best known for the mass production of the polio vaccine. They are also the most significant manufacturer of many psychiatric medications as well as one of the leading manufacturers of human insulin. Add it altogether and you appreciate how LLY has become a 136 billion market cap leader.

Their history of product discoveries is one reason that investors turn to LLY at this troubling time. So too does their history of impressive price strength. Also helping matters is the ample 2.1% dividend yield of LLY shares.

Novartis (NVS)

All stocks have taken a major hit over the last few weeks but one thing we can count on is those who are investing their R & D dollars into developing vaccines or treatments for the Coronavirus will likely fare better than most at this juncture. That certainly is the case for NVS. And beyond that, consumers are going to continue purchasing medication even when they face financial challenges regardless of the stock market.

Since NVS tends to manufacture drugs which are designed for long-term use, for example biologics for treating psoriasis and arthritis, cancer drugs, hypertension medications, and anti-rejection drugs for those who have received transplants, chances are their products will always be in demand. That creates a more consistent earnings outlook that leads to dividend increases. And certainly NVS has increased their dividend impressively over time.

Shares of NVS have been the weakest of this 3 pack so far this year. However, top analysts like Joehn Eade of Argus Research sees $110 as being the rightful destination for NVS shares. That is an ample 47% upside from the current level and a good reason to consider adding NVS shares to your portfolio.

Sanofi (SNY)

This is not the biggest company of the 3…but SNY makes up for it with biggest dividend by far at over 4%. Thanks to research developed during the SARS outbreak, SNY recently announced plans to develop a vaccine for COVID-19. The combination of the two explains why SNY has fared better than most stocks during this treacherous bear market selloff.

Goldman Sachs very much likes what they see in SNY leading to a recent upgrade to Buy. Other firms are also pounding the table on SNY with an average price target of $58 given current prospects. However, if SNY did amazingly develop a vaccine for coronavirus, there is little doubt the stock will likely become much, much very valuable. Gladly there are enough reason to snap up SNY shares without that lottery ticket coming through.

Want more great stock picks? Then check out these additional resources:

List of Best High Yield Dividend Stocks

About POWR Ratings

Reitmeister Total Return portfolio

LLY shares were unchanged in after-hours trading Wednesday. Year-to-date, LLY has gained 9.44%, versus a -25.43% rise in the benchmark S&P 500 index during the same period.

About the Author: Steve Reitmeister

Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks. More...

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