MRK [Archive]

**yhan** Wed Nov 30, 2005 8:45 pm

MRK
Graham mentioned in his book about bargain of unpopular big companies. so there are lots of negative news with MRK. Blast, what do you think of MRK around $29?

**blast_investor** Wed Nov 30, 2005 11:41 pm

I am still not a fan of Merck stock (MRK), I am neutral on it.

Actually, in value investors world, right now there are 2 voices on MRK. For those who like relative value, MRK is definitely a very attractive buy. Its historical PE was much higher before.

I am on the other camp. I am mainly into deep value or absolute value stocks. In terms of absolute valuation comparing to other industry, MRK is not an expensive stock, but its business model has lots of uncertainties on top of its lawsuit troubles.

MRK business model certainly is not as strong as McDonald's or Coke. McDonald or Coke does not need a high tech innovation to continue to dominate, MRK requires that. Without innovation, MRK can not continue its profitibility level acheived before.

Maintaining innovation and drug research is not an easy thing.

**yhan** Wed Nov 30, 2005 11:58 pm

Thanks for the comment. Although Buffet holds a lot of Coke share, I do not think coke is attactive.

**blast_investor** Thu Dec 01, 2005 12:18 am

COKE valuation used to be very high. It has been stagnant for a while. It is not expensive stock right now.

My point was on business model comparison (on durable competitive advantage part) between MRK and COKE, not the valuation part.