Consider these International Health Care Stocks

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Companies in the health care sector provide essentials to both customers and investors: namely, their products and their dividends.  One of the things I look for in a company is products that people need no matter the prevailing economic climate.  Medicines and consumer health products certainly fit that bill.  While the U.S-based health care giants are well-known to most investors, the following is a list of international competitors in the space that may be worth further research.

AstraZeneca (NYSE: AZN) is a $61 billion, UK-based pharmaceutical company with a big shareholder dividend.  Investors paying current prices receive a fat yield of 5.8%, paid semi-annually.  In October, the company announced that revenue dropped 17% and core earnings per share declined 14%.  AstraZeneca trades at very modest trailing and forward price-to-earnings ratios of 10 and 8, respectively.  Clearly, the company’s struggles to overcome the challenging European economic climate have kept a lid on AstraZeneca’s valuation.  AstraZeneca has a wide variety of products, including Crestor for managing cholesterol levels, and Nexium for acid reflux. 

Novartis (NYSE: NVS) is a $160 billion giant based in Switzerland.  Novartis recently reported full-year 2012 results, and the company’s performance was mixed.  Full-year net sales were flat on a constant currency basis, but core earnings per share dropped 3% versus the prior year.  However, Novartis was pleased with its performance amidst the challenging 2012 economy, and provided investors with the 16th consecutive annual dividend increase.  Novartis enjoys a higher valuation profile than AstraZeneca, with a P/E ratio of 13 times full-year 2012 earnings, and yields slightly less than 4%.

Sanofi (NYSE: SNY) is a health care mega-cap with a market value of almost $130 billion.  The French-based juggernaut reported growth in net sales in each of the first three quarters of 2012 versus the prior year, although earnings per share over the first half of the year declined 5% on a constant currency basis.  Sanofi is current trying to steer itself through a challenging period.  Due to the loss of exclusivity of Plavix and Avapro in the United States, Sanofi expects full-year 2012 EPS to be 12%-15% lower than in 2011.  Investors would be wise to monitor the company’s performance going forward to ensure it manages its patent cliff successfully.  On the plus side, investors are treated with a 3.5% dividend yield.

Bayer (NasdaqOTH: BAYRY) is a German-based health care company with an $80 billion market capitalization.  This year the company will celebrate its 150th anniversary and it provides a variety of products, including its namesake aspirin.  Bayer has the richest valuation of these four companies, with a trailing P/E ratio of 25.  The company pays an annual dividend that yields slightly more than 2% at current prices.  The company has a good track record of raising its dividend, with a five-year compound annual growth rate of 10%.

The Bottom Line

For investors looking for international counterparts to the familiar health care giants in the United States, these companies are a good place to start.  Some of them are trading at compelling valuations, and all of them offer growing dividends with current yields that beat the yield on the broader market.  Should the European economy finally begin to find some footing, these companies may be set up well going forward.  As a result, investors may want to give these names a closer look.


rciura has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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