Stock Spotlight: Pfizer

With the markets under pressure again in early June, it is no surprise that the stocks with the high Long Term PowerRatings, the stocks that are likely to outperform over the next year, are the sort of "recession agnostic" stocks from industry groups like utilities, personal products and drug manufacturers.

And this is why a top-rated stock like Pfizer (PFE@PFE | Quote | Chart | News | PowerRating) is such a fitting featured stock for our PowerRatings Stock Spotlight column this week.

Pfizer is a global drug maker that researches, develops, manufactures and markets a wide variety of drugs for both human and animal markets. Some of the more widely known medicines and treatments provided by Pfizer include Celebrex, an arthritis treatment, cholesterol-fighting Lipitor and, of course, the erectile dysfunction pill, Viagra. Some of the areas in which Pfizer's research is most active include HIV/AIDS, diabetes and cancer.

As a stock, Pfizer has a Long Term PowerRating of 9. Our research, involving thousands and thousands of simulated stock trades between 1995 and 2007, indicates that stocks with Long Term PowerRatings of 9 have been higher one year later more than 79% of the time. This compares favorably to the average stock, which has been higher one year later less than 68% of the time.

In addition to being more reliable than the average stock, 9-rated stocks have also simply been better performers than the average stock. We found that stocks with Long Term PowerRatings of 9 averaged gains of more than 18% in a year's time. The average stock, for its part, averaged 12-13% in gains over the same period of time.

Pfizer also belongs to an industry group with a PowerRating of 10 - our highest possible rating for an industry or a stock. We found that industry groups that had Industry PowerRatings of 10 produced average annualized returns of more than 35%. This is more than double the returns of the average industry group over the same backtested years from 1995 to 2007.

Pfizer has an impressive dividend yield of 7.10 and is trading within a few cents of its 52-week low as of this writing. The company recently announced the successful acquisition of Encysive Pharmaceuticals

Looking for more long-term solutions to your investing problems? Don't let the volatility of this market lead you to miss out on stocks you'll be glad to have bought a year from now.

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David Penn is Senior Editor of PowerRatings.net.