I wrote several months ago about this former market darling and how it hadn’t budged for 13 years. Judging by the chart and recent management actions in order to boost shareholder value, I think this stock has some major upside in the coming quarters. The stock in question is none other than Pfizer (PFE).
Management Moves
In early April, the company agreed to sell its Capsugel manufacturing unit to KKR for $2.38 billion in order to focus on finding new higher-margin medicines. This is a great move because it frees up more cash to focus on its core competencies. Management has already indicated that the company intends to use some of the proceeds to buyback more stock, which is a plus for shareholders.
Many analysts and shareholders want Pfizer to divest more businesses to get back onto the track of more drug discovery. The stock has been stuck in the mud for a long time as generics eat into profit margins. Shedding this business and the possibility of more divestitures will excite investors and keep the stock moving higher.
The stock is still attractively valued at 9.1x estimated 2011 earnings of $2.24 per share. Additionally, the stock pays a solid dividend of 3.90%, which has the prospect of increasing with cash coming in from possible future divestitures.
The Chart
After years of stagnation, the chart finally looks terrific. It staged a strong breakout on high volume in early-February and has kept churning higher ever since. Volume on the up days has consistently been higher than on the down days, which indicates institutional interest. There is strong support from its 50-day moving average, which currently stands at $19.64. There is nothing wrong with the chart, so I would be a buyer of the stock here.
Getting Technical: Is This Old Favorite Finally Back? is an article from: 
