Out Fox The $treet

Allergan recently missed Q3 estimates that should mostly be ignored. The growth pharma has a huge capital return plan that overrides current earnings weakness. The net payout yield will push into one of the top yields in the current market. Allergan  (NYSE: AGN ) hit our radar screen due to the combination of two key signals: plunging stock price and massive capital return plans. The market typically runs away from a stock at the wrong time and these contrary positions can signal the market has the situation wrong. The stock closed last week around multi-year lows of $195. With politicians increasingly attacking drug pricing and the costs in the healthcare system, are the capital return plans enough to consider buying the massive dips in Allergan from a high near $340 back in 2015. Read the full article on Seeking Alpha.  Disclosure: No position. Please review the disclaimer page for more details. 

Pfizer is down sharply over the last couple of months culminating with a decision to not split into two companies. The company has a stock buyback plan, but chooses to use larger amounts of cash on making acquisitions such as paying $14 billion for Medivation. Pfizer isn't a horrible stock to own, but the signals don't suggest outperformance for the next year. At first glance, the multi-month drop in  Pfizer (NYSE: PFE )  appears to offer an opportunity. After all, the dividend is back to a respectable 3.5%. Read the full article on Seeking Alpha.  Disclosure: No position mentioned. Please review the disclaimer page for more details. 

Summary Merck announces another large stock buyback. Though Merck has a solid net payout yield, the yield doesn't match the highest in the market. The smaller buybacks plan than two years ago along with the higher stock price is a big negative for the stock going forward. Merck (NYSE: MRK ) made headlines this week with the announcement of adding $10 billion to the stock buyback program. The large pharma has a long history of returning cash to shareholders, but the company made a perplexing statement regarding shares outstanding that convolutes the benefits of the buyback. On top of that, the stock has a market value of $163 billion making one wonder if the announced capital return is enough to make the stock interesting after a few years of strong stock gains. Read the full article on Seeking Alpha. Disclosure: No position mentioned. Please review the disclaimer page for more details.