HomeSeptember 2012Taking Stock in Israel

Taking Stock in Israel

The L. Perrigo Company (PRGO) was founded in 1887, in Allegan, Michigan, by Luther and Charles Perrigo, who ran a country general store.  What does this have to do with Israel?
In March 2005 the firm merged with Agris Industries Ltd., an Israel-based generic pharmaceuticals company in an $850 million transaction.  The company now has headquarters in Michigan and in Israel.
The company has a market capitalization of $10.8 billion.  In my opinion, the stock is suitable for aggressive to moderate growth investors.  I like to own about 25 such stocks in the portfolios that I manage.  I also like to own the very best stocks that I can own at any given point in time.
The return to Perrigo shareholders over the years has been spectacular.

This $10.7 billion dollar company (Large-Cap) has returned a remarkable total return average of 28.6% per year, over the last ten years.
The last three years have been even more remarkable.  With the help of its Israeli acquisition, the company has delivered average returns of over 63.3% per year!
The stock is up another 35.2% over the last twelve months, and it was only down 7.2% in 2008, while the market was down 38.5%.
When I compare Perrigo with the other 2,860 stocks in my proprietary database, it earns a performance grade of “A.”
My analysis of stocks combines two powerful criteria.  The first is performance, and the second is valuation.
The shares are currently trading at 21.2 times forward earnings.  This is a little rich.  The company is expected to continue to grow its earnings at a 12.3% pace per year over the next five years.  This gives the shares a PEG ratio of 1.72, which is also a little rich.
I have a five-year target price of $204, however, which gives the shares just over 78% upside potential over the next five years.  I would like to buy this stock at a little cheaper valuation, but it does earn a valuation grade of “B-.”
When I combine performance with value, the stock ranks very high overall.

Out of the 2,861 stocks that I follow, Perrigo comes in at #81.  It gets an overall grade of “A-.”  I like to focus on stocks that are graded “A-“or better.  Clients of Gunderson Capital Management are currently long on Perrigo shares.

All data from Best Stocks Now App.

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