Stock Market Series

Is Valeant Pharmaceuticals International A Buy Or Bust?

Last week, I ran a stock screen to find undervalued stocks that are trading in high volumes on TMX Money and shockingly realized that Air Canada and BlackBerry are in that list.

Screen Shot 2017-11-14 at 4.53.58 PM

Another company that interests me is Valeant Pharmaceuticals International (TSE:VRX) because the stock price was at $335 in 2015 and today the stock is trading at $20.45.   Valeant Pharmaceuticals International, headquartered in Laval, Quebec, is a multinational pharmaceutical and medical device company.  Valeant Pharmaceuticals is engaged in developing and marketing a range of branded, generic and branded generic pharmaceuticals, over-the-counter (OTC) products, and medical devices primarily in the areas of dermatology, gastrointestinal disorders, eye health, and neurology.

I am not a fan of pharmaceutical companies because I know these companies spend a lot of money on research and development and it is very hard to charge a lot of money for medicine.  However, I want to see if Valeant Pharmaceuticals has durable competitive advantage as the company’s stock price is low and the company is undervalued.

So here is the company’s financial statement analysis from 2013 to 2016 (click here if you need a refresher on accounting formulas):

Screen Shot 2017-11-21 at 5.35.08 PM

Unsurprisingly, Valeant Pharmaceuticals’ balance sheets still are not looking good after the big fall in stock price and I would not invest in the company at this present moment as retained earnings have been negative and net incomes are negative in the last two years.

So there you go.  Maybe I am right about pharmaceutical companies after all.

So a question for all the viewers out there,

“Do you current own pharmaceutical companies in your portfolio and how are they performing?”

 

Please leave your comments below.  Also I just started my podcast, so be sure to check it out at https://soundcloud.com/6milliongal.  Catch you on the flip side!

 

 

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