Buy and Hold Pfizer? It’s a Losing Investment- For Now

As most of you know, I’m a big advocate of the “buy and hold” strategy of investing. And, actually, I really like the “buy, hold and dollar cost average to your position” strategy.

Well- if you had bought Pfizer (PFE) at any time in the last 8 years, that strategy has gotten you nowhere. In fact, it’s losing you money nearly every single year. Even if you’re dollar cost averaging.

A Marketwatch columnist discussed in April 2008 a few of the most recommended stocks by newsletter editors:

With that thought in mind, here are the stocks that, as of a Sunday-evening deadline, are most popular among the nearly 200 newsletters tracked by the Hulbert Financial Digest. Notice that GE remains most popular, despite Friday’s carnage:

Company Ticker # newsletters recommending

General Electric Co. GE 21
Johnson & Johnson JNJ 18
Apple Inc. AAPL 15
Pfizer Inc. PFE 14
Microsoft Corp. MSFT 14

Why is Pfizer still among the most recommended when its returns have not only just been bad, but been dismal?

Here are the grim stats:

1. The stock has been down three of the last five years.

2. The stock is down 15.36% year-to-date.

3. Total 3 Year Return: down 10.01%

4. Total 5 Year Return: down 8.40%

Was this a good investment?

If you had invested $1000 on January 1, 2003 and reinvested all dividends, you would have $809.80.

Pfizer just hit an 11 year low. And it continues to slide.

This stock is one of those that just slowly eats away at your investment instead of turning down, say, 15% in one or two sessions. You might be apt to sell it if it sold off suddenly. Instead, it slowly declines and all the while investors “hope” for that turnaround.

Is Pfizer cheap?

But maybe you should now be adding to your position? Right? Maybe Pfizer is a “value” stock?

Here are its stats:

1. P/E is 16.82

2. P/S is 2.70%

A P/E of 16.82 is NOT cheap. In fact, that wouldn’t even qualify as “value” by most value investing stock pickers who normally look for companies whose P/E is below 15.

And to top it off, Pfizer isn’t even growing. Yes, they are paying a big dividend of 6.90%. But you can invest in other companies that actually have a growth plan for the future with a similar dividend.

Conclusion:

Pfizer is NOT a hidden gem. It’s not a deep-value stock that the market is ignoring.

It’s just slowly eating away at your investment.

Attention all newsletter writers: It’s time to change your tune on Pfizer.

There are far too many good companies to invest in out there to bother with Pfizer. Someday, it really WILL be a value pick. I’ll let you know when that happens. Given the slow bleed, we’ll all be waiting awhile.