Merck & Co. — All The Good News Is In (MRK)

There are times in the life of a stock when it pays to take out insurance.

And in the investment world that means buying PUTs.

Here at A Jew and His Money, we’re big believers in the life cycle of securities, and taking proper care of them from birth through old age.  But it’s a rare day when we just suggest a straight PUT purchase on a stock.

And today is no exception.

What we’ve found, instead, is a goldmine opportunity to profit from Merck’s (NYSE:MRK) current amble outside the 83^rd floor window of the Chrysler Building.

It won’t end well…

MRK has set seven new all-time highs over the last eight trading sessions, and the drug-pusher’s bulls are certain the run will never end.

But we beg to disagree.

We’ve seen the numbers and the news, and despite the fact that the vaxx fanatics who run the company just took over Imago Biosciences, our considered response is … MEH.

It’s our view that Merck is about to take it on the chin—and we’re not alone.

Some very well-positioned individuals also agree with us.

But more on that in a moment.

First, let’s take a mosey through the fundamentals.  Before we offer you the whopper.

Can anyone explain this to us?

Why the names?

DemiJohn?  What the…?

Anyway, the numbers are like this—

• P/E is 18.24 (relatively sane in today’s market), though Forward P/E is 20% LOWER at 14.58.  Analysts are expecting a whole heap more earnings, apparently.  Or a serious decline in share price.
• Dividend Yield is 2.51%—also respectable.
• Price to Book is a drug addled 6.27, and…
• According to consensus, EPS next year are expected to grow by just 2.29% (which leaves us wondering how long price can remain so elevated).
• Q/Q EPS FELL by 29.00%.  And that, we say, is just the beginning.
• But the greatest indictment of the current stock price comes directly from the horse’s mouth, as it were.  Insiders sold no shares at all over the last year.  Then

  May the Holy One of Israel guide us straight.

  And may we merit the glory of redemption.

  Many happy returns!

  Matt McAbby

  Follow @HughLOHaynew