November 2022

Bargain Deal For A Quality Stock

Uncertainty. That’s the prevalent sentiment in the investment community these days.

Investors have been hesitant to buy stocks because they believe the bear market isn’t over yet.

Moreover, investors are anxious over the possibility that the stocks will keep falling as issues like higher inflation continue to hound the market.

However, it’s critical to remember that although today’s situation is challenging, it’s only temporary. This means that businesses with solid track records and promising prospects still make excellent buys.

One of the companies outperforming the market this year but which has fallen out of investors’ favor recently, is AbbVie (ABBV).

AbbVie stock has been declining in value lately following an underwhelming third-quarter earnings report. On top of that, the looming patent expiration of its top-selling drug Humira remains a significant concern among investors.

While the Humira situation is clearly not good news for the company, the reality is that AbbVie has impressively preserved the medication’s exclusivity for almost a decade longer than initially expected. Plus, the company has been boosting Humira pricing every year to cope with the declining revenues in the EU, where it already lost patent protection in 2018.

Hence, it’s acceptable for Humira’s chapter in AbbVie’s story to end. After all, the drug has given the company so much. It has been primarily responsible for the more than 325% climb in the company’s share price since 2012 when AbbVie was spun out of Abbott Laboratories (ABT).

Nonetheless, Humira’s impending patent loss doesn’t mean that AbbVie will simply abandon its roots.

The company has since developed potential successors of Humira, namely, Skyrizi and Rinvoq.

So far, the two auto-immune drugs have delivered promising results and are on track to keep the company in tip-top shape in its post-Humira era.

These newer immunology drugs are showing impressive growth potential, with Rinvoq recording a 56% increase in revenue in the third quarter of 2022 and Skyrizi revenue soaring by 85%.

Both are also on track to beat Humira’s peak sales, with joint peak sales from Skyrizi and Rinvoq initially estimated to reach roughly $15 billion.

However, recent revenue reports show that the two could surpass the estimate and completely eclipse Humira’s more than $20 billion annual return.

Obviously, AbbVie would require more than its immunology segment if it plans to sustain a good top and bottom-line growth trajectory.

Other than the more than 10 neuroscience, hematology, immunology, and oncology candidates in its pipeline, which are projected to be ready for market launches in the three to five years, AbbVie has been diving into the aesthetics and eye care markets.

Its eye care program, specifically RGX-314, which is currently being developed in partnership with Regenxbio (RGNX), is an interesting wildcard. For context, the eye care segments for wet and dry advanced macular degeneration are roughly worth over $10 billion to $20 billion annually.

With its Humira chapter closing, AbbVie could be ushering in a new era where products from its Allergan acquisition take the lead.

For example, its Botox franchise consistently delivers impressive results. Even its Botox for migraine line has been recording double-digit revenue growth in the third quarter, indicating gains in AbbVie’s neuroscience segment.

As for the aesthetic indications of Botox, this particular portfolio could be a key driver in the company’s future growth.

Aside from Botox, AbbVie also gained access to the widely used dermal filler Juvederm. With the facial aesthetics industry pegged to experience a compound annual growth rate yearly at 14%, the market is estimated to hit $15.2 billion by 2028.

This trend of AbbVie dominating the market is likely to continue as the company is confident that competitors would be unable to develop biosimilars of Botox. That means its Botox line could keep adding to its top-line growth for an extended period.

Overall, AbbVie is a solid bet among the “Big 8” in the pharmaceutical world, which includes Johnson & Johnson (JNJ), Merck (MRK), Gilead Sciences (GILD), Amgen (AMGN), Eli Lilly (LLY), Bristol Myers Squibb (BMY), and Pfizer (PFE).

Moreover, this is an excellent time to hunt for deals as several quality stocks continue to decline, affected negatively partly by the momentum of the broader market. Among stocks to consider, AbbVie should be at the top of your list.

November 1, 2022

Jacque's Post

Hello everyone,

It was .25% points rise in Australia on Tuesday by the RBA.

What will it be on Wednesday by the Fed? .75% or .50%

The market is treading water today waiting for the announcement and the press conference.

The job market is still hot with job openings surging in September, despite the Fed’s efforts to cool the market.

So, we just must wait.

Continuing from where I left off on the story about climate change and what our future will look like.

Let’s think about Africa for a moment.

Droughts and heat waves and thriving economically are just not a match anywhere. According to the African Development Bank, the continent is already losing up to 15% of its economic growth because of climate change.

At just over one degree of temperature rise, climate change may already have worsened global income inequality by as much as 25%.

It will become increasingly dangerous to work outside in the hottest part of the day. Many residents will be trapped indoors because of the heat. Governments may introduce policies related to outdoor labor as the world gets hotter.

When I worked as a jillaroo in outback Australia, both jackaroos and jillaroos started at around 4am in the morning in peak summer months, rested in shade or inside during the heat of the day, and then worked again from about 3-4pm up until 9:00pm. It was the only safe way to do the work in the heat.

And what about our reefs?

In the new world, there will probably be zero living coral reefs.

This will have far-reaching effects.

Food harvested directly from corals supplies protein for hundreds of millions of people today. And maybe a quarter of all global ocean biodiversity depends on reefs, all of which are believed to be imminently endangered.

The world’s oceans will grow more acidic which will affect the marine food chain.

How high will sea levels rise?

Greenland contains enough ice to raise sea levels by more than 20 feet. And the Antarctic would raise them considerably more than that. But we won’t see a lot of that this century. Already tens of billions of tons of ice are melting into the oceans every year but given the size of the planet, the rate feels slow.

There is one thing we do know and that is that the sea levels will continue to rise – forever.

Our food

At two degrees of warming, yield declines are expected for most staple crops. Some are estimating that 40% of today’s cropland is expected to experience severe drought at least three months a year by 2050.

These challenges will bring about new seeds, new fertilizer, and new farming methods.

Weather disasters

More intense, more frequent.

…over a third of the world’s population would be hit with severe heat waves once every five years. (NYT)

None of us will ever forget the 2019-2020 Australian bushfires, which killed approximately three billion animals. Do you remember the effect of the smoke over Sydney?

Ferries couldn’t run

Fire alarms in office buildings were continually set off by the smoke

It was a health hazard to walk outside.

The NYT reports that in India, there could be 30 times as many severe heat waves as today lasting five times as long on average.

Solar and wind power will be the energy of the future. But other forms of energy could also be possible. Think about green hydrogen, geothermal or next generation nuclear.

Battery technology will be updated and modernized.

The demand for Lithium could possibly grow eightfold by 2030.

There are projects planned for drilling for minerals at the deepest parts of the ocean floor, and China is even thinking about sourcing elements from the moon.

A quarter of a million people could die annually from climate-related causes.

The climate impacts are only half the story. The other half will be told by our response to climate change. We won’t stop the constant climate crises in our world now, but how we manage them and build a future around them will be critically important.

Cheers,

Jacque

Learning never exhausts the mind.

Leonardo da Vinci

November 1, 2022

Diary, Newsletter, Summary

Global Market Comments
November 1, 2022
Fiat Lux

Featured Trade:

(LAS VEGAS NOVEMBER 4 GLOBAL STRATEGY LUNCHEON)
(TESTIMONIAL)

SOLD OUT - Friday, November 4, 2022 Las Vegas, Nevada Global Strategy Luncheon

Diary, Lunch, Newsletter

Come join me for lunch for the Mad Hedge Fund Trader’s Global Strategy Update, which I will be conducting in Las Vegas, Nevada on Friday, November 4 at 1:00 PM.

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Testimonial

Diary, Newsletter, Testimonials

Dear John,

You win!

After I got off the phone with you, I went onto your website and listened to two videos on options.

For me, the best thing about the videos were that they were only 20 minutes long and they stuck to the basics – no selling, no superfluous chatter.

After talking with you the other night and listening to you over the years, I got the gist faster than I thought I would. The problem with listening to all videos at the end of the day is that one is so darn tired, and it becomes hard to focus to learn yet another subject!

But your video worked. I will have to listen again to make sure I understand everything properly but no worries for me to do that.

BTW, I did what you recommended and ended up laddering the MSFT options, 4.10, 4.05, 4.00 and it worked, and I now have six contracts and they are all up.

I am starting to get it and I thank you!

Don’t hurt yourself with those 10-mile hikes!!

Speak soon.

My very best,

Diane,
New York City

November 1, 2022 - Quote of the Day

Diary, Newsletter, Quote of the Day

“You don’t pick your passions, your passions pick you,” said the novelist, John Irving.